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Pembridge Resources plc
Contents
Strategic Report 2
Chairman’s and Chief Executive’s statement 2
Principal Risks and Uncertainties and Key Performance Indicators 6
Corporate and Social Responsibility Report 9
Board of Directors and Senior Management 10
Directors’ Report 11
Governance Report 13
Directors’ Remuneration Report 16
Directors’ Responsibilities 19
Independent Auditor’s Report to the members of Pembridge Resources Plc 20
Consolidated Financial Statements 26
Consolidated Statement of comprehensive income 26
Consolidated Statement of ȴnancial position 27
Company Statement of ȴnancial position 28
Consolidated Statement of changes in equity 29
Company Statement of changes in equity 31
Consolidated Cash ȵoZ statement 32
Company Cash ȵoZ statement 33
Notes to the Financial Statements 34
Company Information 65
Company Information 65
Notice of Annual General Meeting 66
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Strategic Report
Chairman and Chief Executive’s statement
We are pleased to present the report and Consolidated
Financial Statements of Pembridge Resources Plc
(“Pembridge” or “the Group”) and the company
Financial Statements of Pembridge Resources Plc (“the
Company”) for the year ended 31 December 2020.
Introduction
Having acquired Minto Explorations Ltd. (“Minto”) from
Capstone Mining Corporation (“Capstone”) in 2019 and
restarting the operation of the copper mine in October
2019 the Company Zas looking forZard to developing
the project. The Covid-19 pandemic that moved most
commodities prices doZnZards impacted the Minto
project signiȴcantly. In the ȴrst half of 2020 Ze Zere
facing the result of copper prices falling from US$2.79
at the end of 2019 to a loZ of US$2.10 on 23 March
2020. The strong support from Minto’s shareholders
ensured that 2020 proved to be a year of success and
groZth and established the foundation for realising the
long-term value of Minto.
During 2020 a successful inȴll drilling program Zas
executed Zith the results being the basis for the NI
43-101 Preliminary Economic Assessment Technical
Report being completed in early 2021 by JDS Energy
& Mining Inc.
Chairman and Chief Executive’s statement
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Strategic Report
Restructuring Minto shareholding and
removing Pembridge ȴnancial obligations
relating to Minto
In light of the ȴnancial market conditions as a result of
the Covid-19 pandemic and the potential for material
cash calls on Pembridge the Company agreed Zith
the other shareholders of Minto (collectively “the
US Investors”) to remove certain future funding
obligations of Pembridge and to restructure the Minto
share oZnership.
The Joint Advisory Committee of Minto (consisting of
representatives from Pembridge and the US Investors)
authorised a US$3 million capital call to fund Zorking
capital Zhich Zas due to be paid by Pembridge
in accordance Zith the Shareholders’ Agreement.
Considering the potential cash needs of Minto during
the ȴrst half of 2020 and the subsequent future
ȴnancial commitments on Pembridge that this Zould
impose as Zell as having undertaken a strategic revieZ
the %oard of Pembridge concluded it Zas in the best
interests of the Company to seek an agreement Zith
the US Investors Zhereby the Company reduced
its percentage oZnership in Minto in exchange for
removing certain future ȴnancial liabilities thereby
ensuring the ȴnancial stability of the Company.
Pembridge reached an agreement Zith the US
Investors that provided cash for Minto to meet its cash
requirements as Zell as assist Pembridge’s liquidity
in the unprecedented market conditions. The US
Investors subscribed for neZ Class % shares in Minto
to a value of US$3 million to support the short-term
ȴnancial needs of Minto thereby ensuring its ability
to continue to operate in the challenging times from
the start of 2020. As a result of this investment into
Minto by the US Investors, Pembridge’s economic
interest Zas reduced from 33 to 11. In addition,
the US Investors agreed to support a decision by the
Minto Board of Directors for Minto to take over all of
Pembridge’s future payment obligations on behalf of
Minto Zith respect to the escroZ surety account (the
“Control Account”). This action reduced the future
ȴnancing commitments of Pembridge by CAD$3 million.
Further, the US Investors also agreed to support a
decision by the Minto Board of Directors for Minto
to take over all future consideration payments due
from Pembridge to Capstone Mining Corporation
(“Capstone”) in accordance Zith the Share Sale and
Purchase Agreement (“SPA”) dated 3 June 2019.
Previously Pembridge had been expected to pay a
minimum of US$5 million and up to US$20 million out
of the income that it derived from Minto.
On 16 April 2020 the Board of Directors approved the
issuance and allotment of 11,175,499 neZ ordinary
shares at a price of 3.3p each, raising proceeds of
e368,000. To enable this share issue Zithin the rules
of the London Stock Exchange the directors agreed
to surrender their share options and the changes
Zere made to the Convertible Loan Agreement Zith
Pembridge’s Chairman and Chief Executive Oɝcer, Gati
Al-Jebouri. Those changes included extension of the
loan’s maturity to 31 December 2022 and removal of
the right to convert to shares in the Company in return
for Zhich the interest rate on the loan Zas increased
from 8 to 10 per annum.
Chairman and Chief Executive’s statement
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Strategic Report
Chairman and Chief Executive’s statement
Minto operations
During the year to 31 December 2020, 629,078 MT
(2019 104,005 MT) of ore Zere processed, resulting in
production of 24,646 MT (2019: 6,436 MT) of copper
concentrate containing 8,089 MT (2019: 2,247 MT) of
copper, 8,420 oz (2019: 2,413 oz) of gold and 74,025
oz (2019: 19,591 oz) of silver. USD$64.3 million (2019:
US$7.1 million) Zas received in payments for production
during the year to 31 December 2020, pursuant to the
otake agreement Zith Sumitomo, of Zhich $5.4 million
related to December 2019 production.
The measures taken by the Canadian and Yukon
government as a result of the COVID-19 pandemic
have had signiȴcant impacts on Minto, including
mandatory quarantines of employees and contractors
entering the Yukon. Such quarantines have disrupted
operations and caused above normal operating
expenses but have enabled operations to continue
Zhile ensuring the safety of the mine’s employees.
During 2020, Minto took certain steps to mitigate risk,
Zhich included increased and routine communication
Zith the Yukon Government, adhering to a tZo-Zeek
quarantine of employees arriving from outside of
the Yukon and physical distancing measures at site.
As a result of the close cooperation Zith the Yukon
government, Minto is noZ able to have the quarantine
of employees on site as opposed to in Whitehorse. A
vaccination program has been implemented and by
the end of Q2 2021 all employees accepting to be
vaccinated Zill have been vaccinated.
Shortly after taking over Minto, an o-take agreement
for 55,000 tonnes of copper concentrate to be
produced by the Minto mine Zas signed Zith
Sumitomo Canada Limited (“Sumitomo”), a subsidiary
of Sumitomo Corporation, (the “Agreement”). In
September 2020, Minto signed a prepayment funding
facility Zith Sumitomo of up to US$12.5 million to
ȴnance the Zorking capital needs of Minto.
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Strategic Report
Financials
2020 is the ȴrst full year of production after the
acquisition of Minto by Pembridge and the US
Investors, compared to only three months after the
mine restarted at the end of 2019. During the year
the Group made a loss of US$27,275,000 (2019 – loss
of US$13,087,000). The operating loss of $24,296,000
(2019: $11,818,000) comprised an exceptional expense
of US$9,369,000 on revaluing the Capstone liability due
to actual and expected increased copper prices (2019:
exceptional expenses from the Minto acquisition of
$2,347,000), administrative costs of the Company of
$1,585,000 (2019: $3,049,000) and the operating loss
from Minto of $13,342,000 (2019: loss of $6,422,000).
The closing cash and cash equivalents balance is
US$415,000 (2019: US$ 964,000).
With the copper price having recovered to levels
Zell above those seen in the ȴrst half of 2020, I
and the Board are conȴdent in the ability of Minto’s
management team to generate the value that Zas
ȴrst identiȴed at the time of the acquisition of Minto.
I am conȴdent that the next several years Zill prove
to be extremely interesting Zith respect to the
copper market conditions. I base this conȴdence
on my expectation of continuous groZth in copper
demand due to the energy transition process that is
accelerating as Zell as the expected signiȴcant increase
in electric vehicles that Zill be sold at the same time
as many countries are starting or expanding major
infrastructure projects that Zill require more and more
copper. I look forZard to leading Pembridge on this
challenging, and reZarding for our shareholders, path.
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Strategic Report
Principal risks and Uncertainties
Nature of Risk How we manage it
Funding Risk
The Company and its subsidiary may need to secure
additional funding to cover Zorking capital needs.
Impact
Shortage of cash for Head Oɝce and operational costs.
The Company and its subsidiary have the capability to
raise funds through equity and loans from shareholders.
COVID-19
The COVID-19 pandemic has forced many businesses
to close.
Impact
Closure of the mine Zould stop production, Zith
consequential impact on Minto’s ȴnances and on its
employees and suppliers.
By folloZing government requirements on quarantining
Zorkers, vaccinating those employees that agree to be
vaccinated, and using preventative measures on the
site, the mine has been able to remain open to date.
Copper Price Risk
The success of Minto is dependent partly on the market
value of copper.
Impact
A high copper price Zill provide a good income and
additional funding for mine development, Zhereas a
loZ market price Zill reduce that income.
Continuous monitoring of the forecast cash ȵoZ
for Minto together Zith using hedging instruments
for ȴxing the price of produced copper ensure
that copper price risks are managed. In addition,
continuous evaluation of cost optimisation
opportunities is carried out to seek to reduce
the operating costs and thus have the ability to
operate proȴtably at loZer copper prices.
Mine Development Risk
The Group’s strategy is to further develop the area
around the Minto Mine and create underground
extensions to extend the life of the Minto Mine.
Impact
Such development requires funding, a lack of Zhich could
delay progress and the resulting increased returns.
As Minto’s operations become established
the Company and its felloZ investors Zill
have increased opportunities to obtain
funding for its further development.
Regulatory Risk
Mining is an industry regulated for environmental and
safety purposes.
Impact
Failure to comply Zith regulations can result
in penalties.
The Company has appointed experienced mine
management Zhose knoZledge of the regulatory
environment enables them to ensure compliance.
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Strategic Report
Principal risks and Uncertainties
Nature of Risk How we manage it
Human Resources Risk
The achievement of the Group’s objectives Zill be
dependent on the Company attracting and retaining
qualiȴed and motivated sta.
Impact
The eɝciency of a particular aspect of the
Group’s operations could be aected leading
to reduced proȴtability.
The Group has attracted and Zill retain a qualiȴed team
by providing a competitive remuneration policy, Zhich
includes ȴnancial performance incentives so as to align
the team Zith the shareholders of the Group.
Investment Risk
The investments the Company makes fail to
generate value.
Impact
The investments are Zritten o.
Pembridge has a comprehensive investment policy and
strategy, as outlined in its Financial Prospects Policy
(“FPP”) procedures, that Zill assist in prudent measures
being made to identify and perform due diligence on
the investments that the Company makes.
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Strategic Report
Principal risks and Uncertainties
Business Review & Development
A revieZ of the business and its operations can be found in the Chairman’s and Chief Executive’s statement on page 1.
Section 172(1) statement
The Directors believe they have acted in the Zay most likely to promote the success of the Company for the beneȴt of
its members as a Zhole, as required by s172 of the Companies Act 2006. A Director of a company is required to act
in a Zay he considers, in good faith, Zould be most likely to promote the success of the company for the beneȴt of its
members as a Zhole, having regard to:
• Likely consequences of long term decisions
• Interests of the employees
• Need to further the group’s business relationships Zith suppliers, customers and others
• Impact of operations on the community and environment
•
Maintaining reputation for high standards of business conduct
• Need to act fairly
The application of the s172 requirements can be demonstrated in relation to the some of the key decisions made
during 2020:
Response to Covid-19 related issues
The Covid-19 pandemic impacted hoZ Ze operate the Minto mine as Zell as hoZ Ze organise our Zork in London.
At the Minto mine all Canadian and Yukon government regulations have been strictly adhered to and all measures
taken to ensure the health and safety of our employees. Prior to receiving approval to quarantine our employees
on site, all sta Zould be quarantined in Whitehorse prior to commencing their Zork shifts on site. At the Minto site,
speciȴc protocols Zere introduced to monitor everyone’s health and isolate sta if there are any health concerns.
The London based team of the Company continued Zorking based at their homes Zith extensive use of conference
calling technology and limited person to person meetings. All regulations set by the UK government have been
adhered to Zith respect to Covid-19.
The Covid-19 pandemic aected the Company ȴnancially in tZo Zays. The Minto mine remained open and producing
copper concentrate throughout 2020, but the fall in copper prices early in the year reduced its income, so that it
needed additional funding at a time Zhen it had been aiming to fund itself. The pandemic also caused a loss of
market conȴdence that caused the Company’s share price to fall and lenders to be more cautious than before, so
that the Company Zas not able to raise further funds as readily as had been expected Zhen its shares Zere re-listed
at the end of 2019. To address these challenges, the Company re-negotiated its agreement Zith its co-investors in
Minto as described above and the Company also raised neZ equity of e368,000 from existing shareholders in May
2020. A further e570,000 of equity Zas raised in early 2021 to fund the Company’s oZn operations.
Involving the local community
As a company operating in the Yukon, Minto engages Zith the First Nations community in the operations & support
functions of the mine, providing much needed employment and Zider economic beneȴts to the local communities.
The Pembridge Board of Directors fully supports all initiatives to continue strengthening the relationship Zith the
Yukon government and the Selkirk First Nation leadership.
By order of the Board
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
17 May 2021
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Corporate and Social Responsibility Report
Pembridge is committed to complying Zith all Health and
Safety, environmental and social legislation and protecting
the health and general Zellbeing of its employees. It is
committed to preserving the environment.
Environment
As a mining-focused company, concern for the
environment is of utmost importance to Pembridge.
It is our policy to reduce to a minimum the potential
environmental impact of our activities and have a
positive impact on the areas in Zhich Ze operate.
Health, Safety and Security
The health, safety and security of the personnel and
communities in Zhich Ze operate takes priority in the
management of our operations. Our goal is to prevent
injury and ill health to employees and contractors by
providing a safe and healthy Zorking environment
and by minimising risks associated Zith occupational
hazards. The monthly report from the Minto mine to
its Board highlights injuries as a performance measure.
Business Ethics
Pembridge is committed to carrying out all its
operations Zith high moral and legal standards.
Pembridge has an anti-corruption and anti-bribery
policy Zhich are in line Zith the requirements of the UK
Bribery Act and equivalent legislation in other countries
Zhere it operates. Sta and contractors are made
aZare of their obligations both on recruitment and by
periodical updates.
The Strategic Report (comprising the Chairman’s and
Chief Executive’s statement and principal risks and
uncertainties) on pages 2-8 Zas approved by the Board
of Directors and Zas signed on its behalf by Gati Al-
Jebouri, Chairman of the Board.
By order of the Board
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
17 May 2021
Corporate and Social Responsibility Report (CSR)
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Board of Directors and Senior Management
David James, &KLHI)LQDQFLDO2ɝFHUDQG&RPSDQ\6HFUHWDU\
David is a Chartered Accountant, having qualiȴed Zith KPMG in 1995. David has had a
varied career including time spent in Budapest, Hungary and in blue chip multinational
groups, folloZed by 10 years running his oZn business as a consolidation and reporting
specialist, providing ȴnancial reporting services mainly to multinational listed companies
before joining the Company in February 2020.
Board of Directors and Senior Management
Gati Al-Jebouri, &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
Mr Al-Jebouri, Zho Zas born in Bulgaria in 1969, graduated from the University of Bristol
Zith a Civil Engineering degree in 1990 and from the Institute of Chartered Accountants
as a chartered accountant in 1994. In 2001 he Zas appointed Deputy Minister of Energy
of Bulgaria and in 2002 Bulgaria’s First Deputy Minister of Finance. His varied career
has included Zorking for the accountancy ȴrm KPMG in London and Bulgaria until
being recruited to LUKOIL, Zhere he soon became Director of investment and Finance
in the London oɝce. In 2003 he became Chief Financial Oɝcer of LITASCO (LUKOIL
International Trading and Supply Company), Zhere he rose to Chief Executive Oɝcer
tZo years later. In 2010 he became Executive Director for Finance and Marketing of
LUKOIL Mid East Ltd and in 2016 Zas promoted to Vice President LUKOIL and Head of
Middle East Upstream. He has been a Non-Executive Director since 2017 and became
Chairman and Chief Executive Oɝcer on 19 September 2019.
Frank McAllister, 1RQ([HFXWLYH'LUHFWRU
With over 50 years’ industry experience, Frank McAllister has held various senior and
Board positions in a number of metals and mining companies. He Zorked Zith ASARCO
Incorporated for 33 years during Zhich he became Chief Financial Oɝcer in 1982 and
then Executive Vice President of Copper Operations in 1993. Eventually he became
ASARCO’s President and Chief Operating Oɝcer before becoming Chairman and Chief
Executive Oɝcer in 1999. In 1996 he became an Independent Director of Clis Natural
Resources Inc and its Lead Director from 2004 to 2013. During the same period, he Zas
also Chairman, CEO and a Director at StillZater Mining Co, and served as President of
the National Mining Association during 2012 and 2013. Frank holds an MBA from NeZ
York University, Bachelor of Science in Finance from the University of Utah and attended
the Advanced Management Program at Harvard Business School.
Guy Le Bel, 1RQ([HFXWLYH'LUHFWRU
Guy brings more than 30 years of international experience in strategic and ȴnancial
mine planning to the Pembridge team. He is currently CEO of Aquila Resources Ltd.
He Zas previously CEO and CFO of Golden Queen Mining Ltd, and, earlier, Zas Vice
President Evaluations for Capstone Mining Corp, Director of Golden Queen Mining,
RedQuest Capital Corp and Zas VP, Business Development at Quadra Mining Ltd. He
also held business advisory, strategy and planning, business valuation, and ȴnancial
planning management roles at BHP Billiton Base Metals Ltd., Rio Algom Ltd. and
Cambior Inc. He has extensive experience across precious and base metals industries in
the Americas. Guy holds an MBA Finance from École des Hautes Études Commerciales, a
Master Applied Sciences, Mining Engineering - University of British Columbia and a B.Sc.
Mining Engineering from Université Laval.
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Directors’ Report
The Directors present their report and the
audited Financial Statements for the year ended
31 December 2020.
General information about the Company is provided in
note 1 to the Financial Statements.
Principal activity
The principal activity of Pembridge is to operate as a
base and precious metals focussed holding Company.
The principal activity of its main subsidiary, Minto
Explorations Ltd, is copper mining.
Business review and future development
A revieZ of the business and future developments of
the Group is included Zithin the Chairman and Chief
Executive’s statement on pages 1 and 2, Zhich forms
part of the Strategic Report.
Results and dividends
During the year the Group made a loss of
US$27,275,000 (2019 – loss of US$13,087,000). The
loss incurred during the year consists of the operating
loss generated by Minto, a loss on mark-to-market
revaluation of the Capstone liability, costs of running
the head oɝce in London, and associated listing and
regulatory requirements. No dividends Zere paid
during the year and the Directors do not recommend
payment of a ȴnal dividend (2019: $nil).
Going concern
The Financial Statements have been prepared on a
going concern basis, Zhich assumes that the Company
and Group Zill continue operating in the foreseeable
future and Zill be able to service their debt obligations,
realise their assets and discharge their liabilities as they
fall due. The Company and Minto both have a planning,
budgeting and forecasting process to determine
the funds required to support their operations and
expansionary plans. The Company raised neZ equity
in January 2021, Zhich is expected to support its
operations until it starts to receive repayments from
Minto of its inter-company balance. At 31 December
2020, Minto had cash of US$398,000 and available
capacity of US$ 9.5 million under the prepayment facility
Zith Sumitomo Canada Limited. The Group’s ability
to continue as a going concern is dependent on their
ability to obtain additional funding and the successful
development of their existing assets in order to meet
their planned business objectives. HoZever, because
there can be no assurance of this funding or the
Group’s ability to generate positive cash ȵoZs, a material
uncertainty exists Zhich may cast doubt on the Group’s
ability to continue as a going concern.
At present the Group believes that there should be no
signiȴcant material disruption to its mining operations
from COVID-19, but the Board continues to monitor
these risks and Minto’s business continuity plans.
Having prepared forecasts based on current resources,
assessing methods of obtaining additional ȴnance and
assessing the possible impact of COVID-19, the Directors
believe the Group and Company have suɝcient
resources to meet its obligations for a period of 12
months from the date of approval of these Financial
Statements. Taking these matters into consideration, the
Directors continue to adopt the going concern basis of
accounting in preparing these Financial Statements. The
Financial Statements do not include the adjustments
that Zould be required should the going concern basis
of preparation no longer be appropriate.
Post reporting date events
These are set out in note 33 to the ȴnancial statements.
Directors
The Directors Zho served during the year ended
31 December 2020 and up to the date of signing
the Financial Statements Zere as folloZs:
Gati Al-Jebouri Chairman and Chief Executive
Oɝcer
Francis McAllister Non-Executive Director
Guy Le Bel Non-Executive Director
Substantial shareholders
As at 31 December 2020, the total number of issued
ordinary shares Zith voting rights in the Company
Zas 74,406,993. Details of the Company’s capital
structure and voting rights are set out in Note 24 to
the Financial Statements.
The Company has been notiȴed of the folloZing
interests of 3 per cent or more in its issued share
capital on the date these Financial Statements Zere
approved by the Board.
Party Name
Number of
Ordinary Shares
% of Share
Capital
Gati Al-Jebouri 18,418,754 20.7
Jonathan Armstrong 6,012,121 6.8
Frank McAllister 4,663,540 5.2
Guy Le Bel 3,073,545 3.5
Richard Calleri 5,424,242 6.1
Ruggero Maman 5,424,242 6.1
Directors’ Report
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Directors’ Report
Capital structure
The Company’s capital consists of ordinary shares
Zhich rank pari passu in all respects and are traded
on the Standard segment of the Main Market of the
London Stock Exchange. There are no restrictions
on the transfer of securities in the Company or
restrictions on voting rights and none of the Company’s
shares are oZned or controlled by employee share
schemes. There are no arrangements in place betZeen
shareholders that are knoZn to the Company that may
restrict voting rights, restrict the transfer of securities,
result in the appointment or replacement of Directors,
amend the Company’s articles of association or restrict
the poZers of the Company’s Directors, including in
relation to the issuing or buying back by the Company
of its shares or any signiȴcant agreements to Zhich
the Company is a party that take eect after, or
terminate upon, a change of control of the Company
folloZing a takeover bid, or arrangements betZeen
the Company and its Directors or employees providing
for compensation for loss of oɝce or employment
(Zhether through resignation, purported redundancy
or otherZise) that may occur because of a takeover bid.
Directors’ indemnities
Pembridge maintained liability insurance for its
Directors and oɝcers during the period and also as at
the date of approval of the Directors’ Report.
Financial instruments
The ȴnancial risk management policies and objectives
are set out in detail in Notes 28 and 30 of the
Financial Statements.
Information on exposure to risks
Principal risks and uncertainties are discussed in the
Strategic Report on page 6, Zhile liquidity risks are
covered in Note 28.
Greenhouse gas emissions
The Company consumed less than 40,000 KWh of
energy in the United Kingdom during the period for
Zhich the Directors’ Report is prepared and there is
no local requirement that Minto report its oZn energy
consumption, therefore the Group is exempt from the
requirement to disclose its greenhouse gas and other
emission producing sources under the Companies
Act 2006 (Strategic Report and Directors report)
Regulations 2014.
Corporate Governance
The Governance Report is disclosed on pages 13 to 15.
Statement as to disclosure of information
to auditor
The Directors Zho Zere in oɝce on the date of
approval of these Financial Statements have conȴrmed,
as far as they are aZare, that there is no relevant audit
information of Zhich the auditors are unaZare. Each
of the Directors have conȴrmed that they have taken
all the steps that they ought to have taken as Directors
in order to make themselves aZare of any relevant
audit information and to establish that it has been
communicated to the auditor.
Auditor
The auditors, PKF Littlejohn LLP, have expressed their
Zillingness to continue in oɝce and a resolution that they
be re-appointed Zill be proposed at the general meeting.
By order of the Board
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
17 May 2021
Directors’ Report
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Governance Report
Introduction
Pembridge Resources Plc recognises the importance
of, and is committed to, high standards of Corporate
Governance. At the date of this Report, and Zhilst the
Company is not formally required to comply Zith the
UK Corporate Governance Code, the Company Zill try
to observe, Zhere practical, the requirements of the
UK Corporate Governance Code. The UK Corporate
Governance Code can be found at frc.org.ukour-Zork
publications/Corporate-Governance.
The Company Zill comply Zith QCA Code, as published
by the Quoted Companies Alliance, to the extent they
consider appropriate in light of the Company’s size,
stage of development and resources.
The Company is currently a small company Zith a
modest resource base. The Company has a clear
mandate to optimise the allocation of limited
resources to support its development plans. As such,
the Company strives to maintain a balance betZeen
conservation of limited resources and maintaining
robust corporate governance practices. As the
Company evolves, the Board is committed to enhancing
the Company’s corporate governance policies and
practices deemed appropriate for the size and maturity
of the organisation.
Set out beloZ are the Company’s corporate governance
practices for the year ended 31 December 2020.
Leadership
The Company is headed by an eective Board Zhich
is collectively responsible for the long-term success of
the Company.
7KHUROHRIWKH%RDUG - The Board sets the Company’s
strategy, ensuring that the necessary resources are
in place to achieve the agreed strategic priorities, and
revieZs management and ȴnancial performance. It
is accountable to shareholders for the creation and
delivery of strong, sustainable ȴnancial performance
and long-term shareholder value. To achieve this, the
Board directs and monitors the Company’s aairs
Zithin a frameZork of controls Zhich enable risk to be
assessed and managed eectively. The Board also has
responsibility for setting the Company’s core values
and standards of business conduct and for ensuring
that these, together Zith the Company’s obligations
to its stakeholders, are Zidely understood throughout
the Company.
%RDUG0HHWLQJV- The core activities of the Board
are carried out in scheduled meetings of the Board.
These meetings are timed to link to key events in the
Company’s corporate calendar and regular revieZs
of the business are conducted. Additional meetings
and conference calls are arranged to consider matters
Zhich require decisions outside the scheduled meetings.
During the year, the Board met on 17 occasions.
Outside the scheduled meetings of the Board, the
Directors maintain frequent contact Zith each other to
discuss any issues of concern they may have relating
to the Company or their areas of responsibility, and to
keep them fully briefed on the Company’s operations.
0DWWHUVUHVHUYHGVSHFLȴFDOO\IRU%RDUG- The Board has
a formal schedule of matters reserved that can only be
decided by the Board. The key matters reserved are the
consideration and approval of;
- The Company’s overall strategy;
- Financial Statements and dividend policy;
- Management structure including succession
planning, appointments and remuneration;
material acquisitions and disposal, material
contracts, major capital expenditure projects
and budgets;
- Capital structure, debt and equity ȴnancing
and other matters;
- Risk management and internal controls;
- The Company’s corporate governance and
compliance arrangements; and
- Corporate policies.
6XPPDU\RIWKH%RDUGȇVZRUNLQWKH\HDUȂ During the
year, the Board considered all relevant matters Zithin
its remit, but focused in particular on the liquidity
and ȴnancial stability of both the Company and Minto
under diɝcult conditions. Certain other matters are
delegated to the Board Committees, namely the Audit
and Remuneration Committees.
Attendance at meetings:
Member Meetings attended
Francis McAllister 17
Guy Le Bel 17
Gati Al-Jebouri 17
All Directors attended 100 of Board meetings they Zere
entitled to attend during the period. The Board is pleased
Zith the high level of attendance and participation of
Directors at Board and committee meetings.
Governance Report
14
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Pembridge Resources plc
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Governance Report
The Chairman sets the Board Agenda and ensures
adequate time for discussion.
Non-executive Directors - The non-executive
Directors bring a broad range of business and
commercial experience to the Company and have a
particular responsibility to challenge independently
and constructively the performance of the Executive
management (Zhere appointed) and to monitor the
performance of the management team in the delivery
of the agreed objectives and targets.
Non-executive Directors are initially appointed for a
term of three years Zhich may, subject to satisfactory
performance and re-election by shareholders, be
extended by mutual agreement.
2WKHUJRYHUQDQFHPDWWHUV - All of the Directors are
aZare that independent professional advice is available
to each Director in order to properly discharge their
duties as a Director. In addition, each Director and
Board Committee has access to the advice of the
Company Secretary.
7KH&RPSDQ\6HFUHWDU\ - The Company Secretary role is
carried out by the Chief Financial Oɝcer.
Eectiveness
The Board comprises of a combined Chairman and
Chief Executive Oɝcer and tZo independent non-
executive Directors. Biographical details of the Board
members are set out on page 10 of this report. The
Directors are of the vieZ that the Board and its
committees consist of Directors Zith an appropriate
balance of skills, experience, independence and diverse
backgrounds to enable them to discharge their duties
and responsibilities eectively.
ΔQGHSHQGHQFH- The Board considers each of the
non-executive Directors to be independent in
character and judgement.
$SSRLQWPHQWV – the Board is responsible for revieZing
and the structure, size and composition of the Board
and making recommendations to the board Zith
regards to any required changes.
&RPPLWPHQWV – All Directors have disclosed any
signiȴcant commitments to the Board and conȴrmed
that they have suɝcient time to discharge their duties.
ΔQGXFWLRQ – All neZ Directors received an induction as
soon as practical on joining the Board.
&RQȵLFWVRILQWHUHVW- A Director has a duty to avoid
a situation in Zhich he or she has, or can have, a
direct or indirect interest that conȵicts, or possibly
may conȵict Zith the interests of the Company. The
Board had satisȴed itself that there is no compromise
to the independence of those Directors Zho have
appointments on the Boards of, or relationships Zith,
companies outside the Company. The Board requires
Directors to declare all appointments and other
situations Zhich could result in a possible conȵict
of interest.
%RDUGSHUIRUPDQFHDQGHYDOXDWLRQ – The company
has a policy of appraising Board performance
annually. Having revieZed various approaches to
Board appraisal, the Company has concluded that for
a Company of its current scale, an internal process
of regular face to face meetings is most appropriate,
in Zhich all Board members discuss any issues as
and Zhen they arise in relation to the Board or any
individual member’s performance.
Although the Board consists of only male Directors,
the Board supports diversity in the Boardroom and the
Financial Reporting Council’s aims to encourage such
diversity. The folloZing table sets out a breakdoZn by
gender at 31 December 2020:
Male Female
Directors 3 -
Senior Managers 1 -
Accountability
The Board is committed to providing shareholders
Zith a clear assessment of the Company’s position and
prospects. This is achieved through this report and as
required other periodic ȴnancial and trading statements.
*RLQJFRQFHUQ - The Group’s and Company’s business
activities, together Zith factors likely to aect its future
operations, ȴnancial position, and liquidity position are
set out in the Directors’ Report and the Principal risks
and Uncertainties sections of the Strategic Report. In
addition, the notes to Financial Statements discloses
the Group’s and Company’s ȴnancial risk management
practices Zith respect to its capital structure, liquidity
risk, foreign exchange risk, and other related matters.
Governance Report
15
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Pembridge Resources plc
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Governance Report
The Directors, having made due and careful enquiry,
are of the opinion that the Group and Company have
adequate Zorking capital to execute their operations
and have the ability to access additional ȴnancing,
if required, over the next 12 months. The Directors,
therefore, have made an informed judgement, at the
time of approving Financial Statements, that there is a
reasonable expectation that the Group and Company has
adequate resources to continue in operational existence
for the foreseeable future. As a result, the Directors have
continued to adopt the going concern basis of accounting
in preparing the annual Financial Statements.
ΔQWHUQDOFRQWUROV - The Board of Directors revieZs the
eectiveness of the Company’s system of internal
controls in line Zith the requirement of the Code. The
internal control system is designed to manage the risk
of failure to achieve its business objectives. This covers
internal ȴnancial and operational controls, compliance
and risk management. The Company has necessary
procedures in place for the year under revieZ and
up to the date of approval of the Annual Report and
Financial Statements. The Directors acknoZledge their
responsibility for the Company’s system of internal
controls and for revieZing its eectiveness. The
Board conȴrms the need for an ongoing process for
identiȴcation, evaluation and management of signiȴcant
risks faced by the Company. The Directors carry out a
risk assessment before signing up to any commitments.
The Audit Committee is made up of the tZo non-
executive directors and regularly revieZs and reports to
the Board on the eectiveness of the system of internal
control. Given the size of the Company and the relative
simplicity of the systems, the Board considers that
there is no current requirement for an internal audit
function. The procedures that have been established
to provide internal ȴnancial control are considered
appropriate for a Company of its size and include
controls over expenditure, regular reconciliations and
management accounts.
The Directors are responsible for taking such steps
as are reasonably available to them to safeguard the
assets of the Company and to prevent and detect fraud
and other irregularities.
Remuneration
A Remuneration Committee Zas established during
2019 and is made up of the tZo non-executive
directors. Remuneration paid to Directors in the
period under revieZ is disclosed in the Directors’
Remuneration Report.
Nomination
Currently due to the size of the Company there is no
Nomination Committee.
Shareholder relations
&RPPXQLFDWLRQDQGGLDORJXH– Open and transparent
communication Zith shareholders is given high priority
and there is regular dialogue Zith institutional investors,
as Zell as general presentations made at the time of the
release of the annual and interim results. All Directors
are kept aZare of changes in major shareholders in the
Company and are available to meet Zith shareholders
Zho have speciȴc interests or concerns. The Company
issues its results promptly to individual shareholders
and also publishes them on the Company’s Zebsite:
ZZZ.pembridgeresources.com. Regular updates to
record neZs in relation to the Company are included
on the Company’s Zebsite. Shareholders and other
interested parties can subscribe to receive these neZs
updates by email by registering online on the Zebsite
free of charge.
The Directors are available to meet Zith institutional
shareholders to discuss any issues and gain an
understanding of the Company’s business, its strategies
and governance. Meetings are also held Zith the
corporate governance representatives of institutional
investors Zhen requested.
$QQXDO*HQHUDO0HHWLQJ- At an AGM individual
shareholders are normally given the opportunity to
put questions to the Chairman and to other members
of the Board that may be present although, due to
the COVID-19 pandemic, physical attendance at the
AGM is not possible in 2021. Notice of the AGM is
sent to shareholders at least 21 Zorking days before
the meeting. Details of proxy votes for and against
each resolution, together Zith the votes Zithheld,
are announced to the London Stock Exchange and
are published on the Company’s Zebsite as soon as
practical after the meeting.
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
17 May 2021
Governance Report
16
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Pembridge Resources plc
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Directors’ Remuneration Report
During 2019 the Company put in place a remuneration committee comprising its tZo non-executive directors.
The items included in this report are unaudited unless otherZise stated.
Statement of Pembridge Resources Plc’s policy on Directors’ remuneration
The Company’s policy is to maintain levels of remuneration so as to attract, motivate, and retain Directors and Senior
Executives of the highest calibre Zho can contribute their experience to deliver industry leading performance Zith the
Company’s operations. Currently Director’s remuneration is not subject to speciȴc performance targets.
In 2020, the Company implemented a remuneration policy so that a meaningful proportion of Executive and Senior
Management’s remuneration is structured so as to link reZards to corporate and individual performance, align their
interests Zith those of shareholders and to incentivise them to perform at the highest levels. No Director takes part in
any decision directly aecting their oZn remuneration.
Directors’ remuneration
The Directors Zho held oɝce at 31 December 2020 and Zho had beneȴcial interests in the ordinary shares of the
Company are summarised as folloZs:
Name of Director Position No.of shares held
Gati Al-Jebouri Chairman and Chief Executive Oɝcer 15,418,754
Francis McAllister Non-Executive Director 4,663,540
Guy Le Bel Non-Executive Director 2,823,545
The Directors entered into service agreements at the time of the Company’s admission to the main market in August
2018. Mr. Al-Jebouri entered into a neZ service agreement Zhen he became Chairman and Chief Executive Oɝcer on
19 September 2019. Details of Directors’ emoluments and of payments made for professional services rendered are
set out beloZ.
Remuneration components
For the year ended 31 December 2020 salaries, fees and share based payments Zere the main components of
remuneration, Zith health insurance also for the Chief Executive Oɝcer. This is expected to continue in 2021.
•
Salaries and fees
• Health insurance
• Pensions
• Share Incentive arrangements
Directors’ Remuneration Report
17
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Pembridge Resources plc
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Directors’ Remuneration Report
Directors’ Remuneration Report
Directors’ emoluments and compensation (audited)
Set out beloZ are the emoluments of the Directors for the years ended 31 December 2020 and 2019:
2020
Fees
US$’000
Bonus
US$’000
Share based
payments
US$’000
Health
insurance
US$’000
Redundancy
Pay
US$’000
Total
US$’000
Francis McAllister 26 - - - - 26
Gati Al-Jebouri 301 - - 16 - 317
Guy Le Bel 26 - - - - 26
Total 353 - - 16 - 369
2019
Fees
US$’000
Bonus
US$’000
Share based
payments
US$’000
Health
insurance
US$’000
Redundancy
Pay
US$’000
Total
US$’000
Francis McAllister - - - - - -
David Charles Linsley 155 501 - 13 483 1,152
Gati Al-Jebouri 91 501 - 3 - 595
Guy Le Bel - 250 - - - 250
Total 246 1,252 - 16 483 1,997
Directors beneȴcial share interests (audited)
The interests of the Directors Zho served during the year in the share capital of the Company at 31 December 2020
and at the date of this report or their resignation (if earlier) Zere as folloZs:
Name of Director
Number of
ordinary shares
held at
31 December 2020
Number of ordinary
shares held as at the
date of this report
Number of
options /
warrants
Number of
share options /
warrants vested
but unexercised
Francis McAllister 4,663,540
4,663,540 1,395,833 -
Guy Le Bel
2,823,545 3,073,545 1,395,833 -
Gati Al-Jebouri
15,418,754 18,418,754 2,235,000 -
18
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Pembridge Resources plc
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Directors’ Remuneration Report
Total pension entitlements (audited)
The Company currently has a statutory Zorkplace pension scheme in place but did not pay pension amounts in
relation to any Directors.
The Company has not paid out any excess retirement beneȴts to any Directors or past Directors.
Payments to past Directors (audited)
The Company has not paid any compensation to past Directors.
Payments for loss of oɝce (audited)
No payments Zere made to Directors for loss of oɝce during the year.
Consideration of shareholder views
The Board considers shareholder feedback received and guidance from shareholder bodies. This feedback,
plus any additional feedback received from time to time, is considered as part of the Company’s annual policy
on remuneration.
Policy for new appointments
Base salary levels Zill take into account market data for the relevant role, internal relativities, the individual’s
experience and their current base salary. Where an individual is recruited at beloZ market norms, they may be
re-aligned over time (e.g. tZo to three years), subject to performance in the role. Beneȴts Zill generally be in
accordance Zith the approved policy.
For external and internal appointments, the Board may agree that the Company Zill meet certain relocation and/or
incidental expenses as appropriate.
Policy on payment for loss of oɝce
Payment for loss of oɝce Zould be determined by the remuneration committee once appointed, taking into account
contractual obligations.
Other matters
The Company does not currently have any annual or long-term incentive schemes in place for any of the Directors
and as such there are no disclosures in this respect.
Approved on behalf of the Board
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
17 May 2021
Directors’ Remuneration Report
19
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Pembridge Resources plc
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Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance Zith
applicable laZ and regulations.
Company laZ requires the Directors to prepare Financial Statements for each ȴnancial year. Under that laZ the
Directors have elected to prepare the Group and Company Financial Statements in accordance Zith international
accounting standards in conformity Zith the Companies Act 2006 and as regards the Company Financial Statements,
as applied in accordance Zith the provisions of the Companies Act 2006. Under Company laZ the Directors must not
approve the Financial Statements unless they are satisȴed that they give a true and fair vieZ of the state of aairs of
the Group and the Company and of the proȴt or loss of the Group and Company for that period.
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state Zhether applicable international accounting standards in conformity Zith the Companies Act 2006 have
been folloZed, subject to any material departures disclosed and explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group
and Company Zill continue in business.
The Directors are responsible for keeping adequate accounting records that are suɝcient to shoZ and explain the
Group’s and Company’s transactions and disclose Zith reasonable accuracy at any time the ȴnancial position of the
Group and Company and enable them to ensure that the Financial Statements and the Directors’ Remuneration
Report comply Zith the requirements of the Companies Act 2006 and, as regards the Group Financial Statements,
international ȴnancial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the
European Union. They are also responsible for safeguarding the assets of the Group and Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for the maintenance and integrity of the corporate and ȴnancial information included
on the Company’s Zebsite. Legislation in the United Kingdom governing the preparation and dissemination of the
Financial Statements may dier from legislation in other jurisdictions.
Directors’ Responsibility Statement Pursuant to Disclosure and Transparency Rules
Each of the Directors, Zhose names and functions are listed on page 10, conȴrm that, to the best of their knoZledge
and belief:
• the Financial Statements have been prepared in accordance Zith international ȴnancial reporting standards
adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union, and give a true and fair
vieZ of the assets, liabilities, ȴnancial position and loss of the Group and Company; and
• the annual report and Financial Statements, including the Business revieZ, includes a fair revieZ of the
development and performance of the business and the position of the Group and Company, together Zith a
description of the principal risks and uncertainties that they face.
Directors’ responsibilities
20
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Pembridge Resources plc
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Independent Auditor’s Report to the members of Pembridge Resources Plc
Opinion
We have audited the ȴnancial statements of Pembridge Resources plc (the ȆParent Company’) and its subsidiaries
(the ȆGroup’) for the year ended 31 December 2020 Zhich comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated and Parent Company Cash FloZ Statements and notes
to the ȴnancial statements, including signiȴcant accounting policies. The ȴnancial reporting frameZork that has
been applied in their preparation is applicable laZ and international accounting standards in conformity Zith the
requirements of the Companies Act 2006 and as regards the Parent Company ȴnancial statements, as applied in
accordance Zith the provisions of the Companies Act 2006.
In our opinion:
• the ȴnancial statements give a true and fair vieZ of the state of the Group’s and of the Parent Company’s aairs as
at 31 December 2020 and of the Group’s and Parent Company’s loss for the year then ended;
• the Group ȴnancial statements have been properly prepared in accordance Zith international accounting
standards in conformity Zith the requirements of the Companies Act 2006;
• the Parent Company ȴnancial statements have been properly prepared in accordance Zith international
accounting standards in conformity Zith the requirements of the Companies Act 2006 and as applied in
accordance Zith the provisions of the Companies Act 2006; and
• the ȴnancial statements have been prepared in accordance Zith the requirements of the Companies Act 2006;
and as regard to the Group ȴnancial statements, international ȴnancial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
Basis for opinion
We conducted our audit in accordance Zith International Standards on Auditing (UK) (ISAs (UK)) and applicable laZ.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
ȴnancial statements section of our report. We are independent of the Group and Parent Company in accordance
Zith the ethical requirements that are relevant to our audit of the ȴnancial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest entities, and Ze have fulȴlled our other ethical responsibilities
in accordance Zith these requirements. We believe that the audit evidence Ze have obtained is suɝcient and
appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draZ attention to note 2 in the ȴnancial statements, Zhich indicates that the Group’s and Parent Company’s ability
to continue in operation as a going concern is dependent on its ability to obtain additional funding and successfully
develop existing assets in order to meet commitments and Zorking capital requirements. As stated in note 2, these
events or conditions, along Zith the other matters as set forth in that note, indicate that a material uncertainty exists
that may cast signiȴcant doubt on the Group’s and Parent Company’s ability to continue as a going concern. Our
opinion is not modiȴed in respect of this matter.
In auditing the ȴnancial statements, Ze have concluded that the director’s use of the going concern basis of
accounting in the preparation of the ȴnancial statements is appropriate. Our evaluation of the directors’ assessment
of the Group’s and Parent Company’s ability to continue to adopt the going concern basis of accounting included
revieZing forecast ȴnancial information at the parent company and operating subsidiary level, and obtaining an
understanding of future funding requirements, over a period of 12 months from the date of approval of the ȴnancial
statements.
Our responsibilities and the responsibilities of the directors Zith respect to going concern are described in the
relevant sections of this report.
Independent Auditor’s Report to the
Members of Pembridge Resources Plc
21
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Pembridge Resources plc
|
Independent Auditor’s Report to the members of Pembridge Resources Plc
Our application of materiality
Materiality 2020 Materiality 2019 Basis for materiality
Group - $701,000 Group - $660,000 Average of 1% of revenue and 5% of loss before tax
Company - $88,100 Company - $130,000 5% of loss before tax
Materiality is a key concept in the context of an audit. In providing an opinion on Zhether the ȴnancial statements
give a Ȇtrue and fair’ vieZ, Ze are providing an opinion on Zhether the ȴnancial statements as a Zhole are free from
material misstatement Zhether due to fraud or error.
Materiality is an expression of the relative signiȴcance of a particular matter in the context of the ȴnancial statements
as a Zhole. An item, either individually or in aggregate, is considered material if omitting it or misstating it could
reasonably be expected to inȵuence decisions that users make on the basis of an entity’s ȴnancial statements.
Materiality has both quantitative and qualitative characteristics. It depends on the size or nature of the item or error
judged in the particular circumstances of its omission or misstatement.
We also determine a level of performance materiality Zhich Ze use to assess the extent of testing needed to reduce
to an appropriately loZ level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the ȴnancial statements as a Zhole. Performance materiality for the group ȴnancial
statements Zas set at $490,700 (2019: $462,000) and the parent company Zas set at $61,670 (2019: $91,000), being
70 of materiality for the ȴnancial statements as a Zhole respectively.
The benchmarks and percentages for calculating materiality are unchanged from the prior year. FolloZing the ȴrst
full year of trading for signiȴcant component and subsidiary Minto Explorations Limited, Ze consider that revenue
and loss before tax are the most signiȴcant determinant of the Group’s ȴnancial position and performance used by
shareholders. Materiality for the parent company Zas based upon the result before tax to gain suɝcient coverage of
expenses in our testing.
Whilst the Group materiality for the ȴnancial statements as a Zhole Zas set at $701,000, component materiality Zas
set at CAD$680,000 (USD equivalent approximately $534,000) for Minto Explorations Limited, Zith performance
materiality set at 70. We applied the concept of materiality both in planning and performing our audit, and in
evaluating the eect of misstatements.
We agreed
Zith the audit committee that Ze Zould report all audit dierences identiȴed during the course of our
audit in excess of $35,050 (2019: $33,000). We also agreed to report any other audit misstatements beloZ that
threshold that Ze believe Zarranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, Ze determined materiality and assessed the risk of material misstatement in the ȴnancial
statements. In particular, Ze looked at areas involving signiȴcant accounting estimates and judgement by the
directors and considered future events that are inherently uncertain. We also addressed the risk of management
override of internal controls, including among other matters consideration of Zhether there Zas evidence of bias that
represented a risk of material misstatement due to fraud.
An audit Zas performed on the ȴnancial information of the Group’s signiȴcant operating components Zhich, for the
year ended 31 December 2020, Zere located in the United Kingdom and Canada.
The signiȴcant and material Canadian component Zas audited by a component auditor under our instruction. There
Zas regular interaction Zith the component auditor during all stages of the audit, and Ze Zere responsible for the
scope and direction of their audit process.
We performed a remote revieZ of the component audit ȴle prepared by the auditor of Minto Explorations Limited,
including the Zork performed on the signiȴcant risks identiȴed at group level. The component auditor also provided
their ȴndings to us Zhich Zere revieZed and challenged accordingly.
This gave us suɝcient appropriate evidence for our opinion on the Group ȴnancial statements.
Independent Auditor’s Report to the
Members of Pembridge Resources Plc
22
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Pembridge Resources plc
|
Independent Auditor’s Report to the members of Pembridge Resources Plc
Key audit matters
Key audit matters are those matters that, in our professional judgment, Zere of most signiȴcance in our audit of the
ȴnancial statements of the current period and include the most signiȴcant assessed risks of material misstatement
(Zhether or not due to fraud) Ze identiȴed, including those Zhich had the greatest eect on: the overall audit
strategy, the allocation of resources in the audit; and directing the eorts of the engagement team. These matters
Zere addressed in the context of our audit of the ȴnancial statements as a Zhole, and in forming our opinion
thereon, and Ze do not provide a separate opinion on these matters. In addition to the matter described in the
Material uncertainty related to going concern section Ze have determined the matters described beloZ to be the key
audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this matter
Revenue recognition (Note 7)
Revenue from the sale of metal concentrate is
recognised on transfer of physical possession
to the customer and the customer has the
signiȴcant risks and rewards of ownership
Metal concentrates are normally sold under
pricing arrangements where ȴnal prices are
determined based on quoted market prices in
a period subsequent to the date of sale and
therefore based on forward commodity prices
for the expected period of ȴnal settlement In
addition, there can be subsequent variations to
metal concentrate weight and grade
Minto Explorations Limited is engaged
in streaming and otake arrangements
therefore revenue recognition, including
deferred revenue, needs to take into account
the underlying contractual arrangements
and performance obligations, in accordance
with IFRS 15 Revenue from Contracts with
Customers There is a risk that revenue is not
recorded in accordance with IFRS 15
Our Zork in this area, including that undertaken by the component auditor,
included:
• Updating our understanding of the internal control environment in
operation for the signiȴcant income streams. Undertaking a Zalk-through
to ensure that the key controls Zithin these systems have been operating
in the period under audit;
• RevieZ of key contractual terms contained Zithin the streaming and otake
arrangements, concentrating in particular on any changes from the prior
period, and ensuring the revenue recognised is measured in accordance
thereZith. Ensuring the disclosures in the ȴnancial statements adequately
reȵect the terms of those agreements;
• Substantive transactional testing of income recognised in the ȴnancial
statements by the component auditor, including deferred and accrued
income balances recognised at year-end;
• Cut-o testing by the component auditor around the year-end having
regard to contractual performance obligations and to ensure correctly
matched Zith inventory and other direct mining costs; and
• A revieZ of post year end receipts to ensure completeness of income
recorded in the accounting period, including mark to market pricing
adjustments and variations to Zeight and grade from assay checks up to
the date of ȴnal acceptance.
Carrying value and assessment of impairment
of producing mineral properties, mineral
exploration and development properties, CIP
and properties plant and equipment (Note 15)
Future proȴtability at the mine is expected to
be sensitive to copper market prices and the
success of exploration activities in order to
increase resources
reserves Management’s
assessment of impairment indicators, and
estimation of value in use, will involve cash
ȵow forecasts and assumptions which are
inherently judgmental and potentially sensitive
to reasonably possible change
Our Zork in this area, including that undertaken by the component auditor,
included:
• RevieZing the Zork undertaken by the component auditor Zith regard to
the carrying values in the individual ȴnancial statements of Minto;
• RevieZ of management’s impairment considerations at group level,
including challenge of judgements and estimates therein, as Zell as
obtaining available Zorkings and independent reports to support the
valuation; and
• Evaluating actual performance in the year versus budgeted performance,
particularly Zith regard to quantities processed and product grade
achieved.
The Directors’ judgements in their assessment of recoverability are
reasonable and our Zork did not identify an impairment to the year-end
carrying value.
Independent Auditor’s Report to the
Members of Pembridge Resources Plc
23
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Pembridge Resources plc
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Independent Auditor’s Report to the members of Pembridge Resources Plc
Independent Auditor’s Report to the
Members of Pembridge Resources Plc
Other information
The other information comprises the information included in the annual report, other than the ȴnancial statements
and our auditor’s report thereon. The directors are responsible for the other information contained Zithin the annual
report. Our opinion on the Group and Parent Company ȴnancial statements does not cover the other information
and, except to the extent otherZise explicitly stated in our report, Ze do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider Zhether the other
information is materially inconsistent Zith the ȴnancial statements or our knoZledge obtained in the course of
the audit, or otherZise appears to be materially misstated. If Ze identify such material inconsistencies or apparent
material misstatements, Ze are required to determine Zhether this gives rise to a material misstatement in the
ȴnancial statements themselves. If, based on the Zork Ze have performed, Ze conclude that there is a material
misstatement of this other information, Ze are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance
Zith the Companies Act 2006.
In our opinion, based on the Zork undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the ȴnancial year for Zhich the ȴnancial
statements are prepared is consistent Zith the ȴnancial statements; and
• the strategic report and the directors’ report have been prepared in accordance Zith applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knoZledge and understanding of the Group and the Parent Company and their environment
obtained in the course of the audit, Ze have not identiȴed material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the folloZing matters in relation to Zhich the Companies Act 2006 requires
us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company ȴnancial statements and the part of the directors’ remuneration report to be audited are not
in agreement Zith the accounting records and returns; or
• certain disclosures of directors’ remuneration speciȴed by laZ are not made; or
• Ze have not received all the information and explanations Ze require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation
of the Group and Parent Company ȴnancial statements and for being satisȴed that they give a true and fair vieZ, and
for such internal control as the directors determine is necessary to enable the preparation of ȴnancial statements
that are free from material misstatement, Zhether due to fraud or error.
In preparing the Group and Parent Company ȴnancial statements, the directors are responsible for assessing the
Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
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Pembridge Resources plc
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Strategic Report
Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about Zhether the ȴnancial statements as a Zhole are free from
material misstatement, Zhether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
Zith ISAs (UK) Zill alZays detect a material misstatement Zhen it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to inȵuence the
economic decisions of users taken on the basis of these ȴnancial statements.
Irregularities, including fraud, are instances of non-compliance Zith laZs and regulations. We design procedures in
line Zith our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to Zhich our procedures are capable of detecting irregularities, including fraud is detailed beloZ:
• We obtained an understanding of the Group and Parent Company and the sector in Zhich they operate to identify
laZs and regulations that could reasonably be expected to have a direct eect on the ȴnancial statements. We
obtained our understanding in this regard through discussions Zith management and the component auditor
as Zell as relevant industry experience. We also selected a speciȴc audit team based on experience Zith auditing
entities Zithin this industry facing similar audit and business risks.
• We determined the principal laZs and regulations relevant to the Group and Parent Company in this regard to be
those arising from:
• Disclosure & Transparency Rules
• Listing Rules
• Companies Act 2006
• UK employment laZ
• Local Canadian tax laZs and regulations
• Local environmental, mineral exploration and mining regulations
• We designed our audit procedures to ensure the audit team considered Zhether there Zere any indications of
non-compliance by the Group and Parent Company Zith those laZs and regulations. These procedures included,
but Zere not limited to:
• Making enquiries of management;
• A revieZ of Board minutes;
• A revieZ of legal ledger accounts;
• A revieZ of RNS announcements; and
• A revieZ of component auditor’s Zork surrounding compliance Zith laZs and regulations, Zhich included
obtaining conȴrmations from the subsidiary’s legal counsel.
• As in all of our audits, Ze addressed the risk of fraud arising from management override of controls by performing
audit procedures Zhich included, but Zere not limited to: the testing of journals, revieZing accounting estimates
for evidence of bias; and evaluating the business rationale of any signiȴcant transactions that are unusual or
outside the normal course of business. Similar testing Zas also undertaken by the component auditor on the
subsidiary undertaking.
Because of the inherent limitations of an audit, there is a risk that Ze Zill not detect all irregularities, including those
leading to a material misstatement in the ȴnancial statements or non-compliance Zith regulation. This risk increases
the more that compliance Zith a laZ or regulation is removed from the events and transactions reȵected in the
ȴnancial statements, as Ze Zill be less likely to become aZare of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery,
collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the ȴnancial statements is located on the Financial Reporting
Council’s Zebsite at:
ZZZ.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Independent Auditor’s Report to the
Members of Pembridge Resources Plc
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Pembridge Resources plc
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Independent Auditor’s Report to the members of Pembridge Resources Plc
Independent Auditor’s Report to the
Members of Pembridge Resources Plc
Other matters which we are required to address
We Zere appointed by the Board of Directors on 10 February 2018 to audit the ȴnancial statements for the year
ended 31 December 2017 and subsequent ȴnancial periods. Our total uninterrupted period of engagement is 5
years, covering the periods ending 31 December 2017 to 31 December 2020.
The non-audit services prohibited by the FRC’s Ethical Standard Zere not provided to the Group or the Parent
Company and Ze remain independent of the Group and the Parent Company in conducting our audit.
Our audit opinion is consistent Zith the additional report to the audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance Zith Chapter 3 of Part 16 of the
Companies Act 2006. Our audit Zork has been undertaken so that Ze might state to the Company’s members
those matters Ze are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by laZ, Ze do not accept or assume responsibility to anyone, other than the Company and the Company’s
members as a body, for our audit Zork, for this report, or for the opinions Ze have formed.
David Thompson
(Senior statutory auditor)
For and on behalf of PKF Littlejohn LLP
Statutory auditor
17 May 202
15 Westferry Circus
Canary Wharf
London E14 4HD
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Pembridge Resources plc
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Consolidated Financial Statements
Note
Year ended
31 December 2020
US$’000
Year ended
31 December 2019
US$’000
Revenue from contracts Zith customers 7 58,278 12,398
Production costs (62,542 ) (14,739 )
Mark-to-market revaluation of concentrate receivable 647 -
Royalties (308 ) (204 )
Depreciation and amortisation (8,381 ) (3,459 )
Administrative, legal and professional expenses (2,036 ) (3,110 )
Exceptional items
– acquisition and re-admission costs 8 - (2,347 )
– revaluation of Capstone liability 8 (9,369 ) -
Foreign exchange gain / (loss) (585 ) (357 )
Operating loss 8 (24,296 ) (11,818 )
Finance income 22 -
Finance cost 12 (2,895 ) (1,295 )
Loss before income tax (27,169 ) (13,113 )
Income tax 13 (106 ) 26
Loss for the year (27,275 ) (13,087 )
Other comprehensive income (175 ) 936
Total comprehensive income for the year (27,450 ) (12,151 )
Loss is attributable to:
Non-controlling interest 8 (12,544 ) (5,024 )
Shareholders of the Company 8 (14,731 ) (8,063 )
Loss for the year (27,275 ) (13,087 )
Total comprehensive income is attributable to:
Non-controlling interest (12,546 ) (4,400 )
Shareholders of the Company (14,904 ) (7,751 )
Total comprehensive income for the year (27,450 ) (12,151 )
Earnings per share expressed in US cents
Year ended
31 December 2020
Year ended
31 December 2019
Basic and diluted loss per share attributable to the equity holders of the Company 14 (20.8 c) (33.5 c)
All amounts relate to continuing activities.
The notes form an integral part of these ȴnancial statements.
Consolidated statement of comprehensive income
For the year ended 31 December 2020
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Pembridge Resources plc
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Consolidated Financial Statements
Note
31 December 2020
US$’000
31 December 2019
US$’000
Assets
Non-current assets
Property, plant and equipment 15 56,798 50,207
Intangible assets 16 - 394
Long-term deposits 18 7,059 4,040
Total non-current assets 63,857 54,641
Current assets
Inventories 17 4,401 5,710
Trade and other receivables 18 5,672 8,610
Cash and cash equivalents 19 415 964
Total current assets 10,488 15,284
Total assets 74,345 69,925
Non-Current liabilities
BorroZings 23 (15,470 ) (10,631 )
Lease liabilities 21 (2,835 ) (2,734 )
Reclamation and closure cost provision 22 (25,286 ) (22,438 )
Deferred consideration due to Capstone 32 - (4,305 )
Deferred tax liabilities 13 (388 ) (270 )
Total non-current liabilities (43,979 ) (40,378 )
Current liabilities
Trade and other payables 20 (16,253 ) (8,736 )
BorroZings 23 (1,600 ) -
Lease liabilities 21 (4,764 ) (2,899 )
Deferred consideration due to Capstone 32 (18,571 ) (4,897 )
Total current liabilities (41,188 ) (16,532 )
Total liabilities (85,167 ) (56,910 )
Net assets/(liabilities) (10,822 ) 13,015
Equity
Share capital 24 965 825
Share premium 24 9,222 8,900
Capital redemption reserve 1,011 1,011
Translation reserve 139 312
Other reserve 46 369
Retained deȴcit (30,516 ) (13,465 )
Equity attributable to shareholders of the Company (19,133 ) (2,048 )
Non-controlling interests 27 8,311 15,063
Total equity (10,822 ) 13,015
The Financial Statements Zere approved and authorised for issue by the Board on 17 May 2021 and signed on behalf of the Board by:
łĸŦłĭęôÒŰúôŦŰÒŰúĶúĸŰłČƥĸÒĸîęÒĭŜłŦęŰęłĸ
As at 31 December 2020
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
The notes form an integral part of these ȴnancial statements.
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Pembridge Resources plc
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Consolidated Financial Statements
Note
31 December
2020
US$’000
31 December
2019
US$’000
Assets
Non-current assets
Property, plant and equipment 15 - 3
Investment in subsidiary 31 9,202 9,202
Long-term deposits 18 - 1,517
Inter-company receivable 18 3,399 -
Total non-current assets 12,601 10,722
Current assets
Trade and other receivables 18 428 1,490
Cash and cash equivalents 19 16 399
Total current assets 444 1,889
Total assets 13,045 12,611
Non-Current liabilities
BorroZings 23 (5,198) (2,049)
Deferred consideration due to Capstone 32 - (4,305)
Total non-current liabilities (5,198) (6,354)
Current liabilities
Trade and other payables 20 (214) (1,738)
BorroZings 23 (20) -
Deferred consideration due to Capstone 32 (18,571) (4,897)
Total current liabilities (18,805) (6,635)
Total liabilities (24,003) (12,989)
Net liabilities (10,958) (378)
Equity
Share capital 24 965 825
Share premium 24 9,222 8,900
Capital redemption reserve 1,011 1,011
Other reserve 46 369
Retained deȴcit (22,202) (11,483)
Equity attributable to shareholders of the Company (10,958) (378)
The Company has taken advantage of the exemption alloZed under section 408 of the Companies Act 2006 and has not included its
oZn statement of comprehensive income in these Financial Statements. The Company’s loss for the period amounted to $11,193,000
(2019: $5,555,000 loss).
The Financial Statements Zere approved and authorised for issue by the Board on 17 May 2021 and signed on behalf of the Board by:
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As at 31 December 2020
Registered number : 07352056
Gati Al-Jebouri
&KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU
The notes form an integral part of these ȴnancial statements.
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Pembridge Resources plc
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Consolidated Financial Statements
Consolidated statement of changes in equity
For the year ended 31 December 2020
Share
capital
US$’000
Share
premium
US$’000
Capital
redemption
reserve
US$’000
Translation/
Other
reserve
US$’000
Retained
deȴcit
US$’000
Total
US$’000
Non-
controlling
interest
US$’000
Total
Equity
US$’000
Balance at 1 January 2020 825 8,900 1,011 681 (13,465 ) (2,048 ) 15,063 13,015
Loss for the year - - - - (14.731 ) (14,731 ) (12,544 ) (27,275 )
Other comprehensive income
– items that may be reclassiȴed
subsequently to proȴt or loss
Exchange dierence on translation - - - (173 ) - (173 ) (2 ) (175 )
Total comprehensive
income for the year
- - - (173 ) (14,731 ) (14,904 ) (12,546 ) (27,450 )
Proceeds from shares issued 140 322 - - - 462 - 462
Equity element of convertible loan - - - (53 ) - (53 ) - (53 )
Investment by non-controlling
interest in Minto share capital
- - - - 330 330 2,670 3,000
Change in share of economic
interest in Minto
- - - - (3,124 ) (3,124 ) 3,124 -
Share-based payments - - - 204 - 204 - 204
Transfer to retained deȴcit after
surrender of share options
- - - (474 ) 474 - - -
Total transactions Zith oZners
recognised directly in equity
Balance at 31 December 2020 965 9,222 1,011 185 (30,516 ) (19,133 ) 8,311 (10,822 )
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Pembridge Resources plc
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Consolidated Financial Statements
Consolidated statement of changes in equity
For the year ended 31 December 2019
Share
capital
US$’000
Share
premium
US$’000
Capital
redemption
reserve
US$’000
Translation/
Other
reserve
US$’000
Retained
deȴcit
US$’000
Total
US$’000
Non-
controlling
interest
US$’000
Total
Equity
US$’000
Balance at 1 January 2019 295 2,902 1,011 66 (5,933 ) (1,659 ) - (1,659 )
Loss for the year - - - - (8,063 ) (8,063 ) (5,024 ) (13,087 )
Other comprehensive income
– items that may be reclassiȴed
subsequently to proȴt or loss
Exchange dierence on translation - - - 312 - 312 624 936
Total comprehensive
income for the year
- - - 312 (8,063 ) (7,751 ) (4,400 )(12,151 )
Proceeds from shares issued 530 6,109 - - - 6,639 - 6,639
Direct cost of shares issued - (111 ) - - - (111 ) - (111 )
Equity element of convertible loan - - - 53 - 53 - 53
Investment by non-controlling
interest in Minto share capital
- - - - 531 531 1,059 1,590
Non-controlling interest on
acquisition of subsidiary
- - - - - - 18,404 18,404
Share-based payments - - - 250 - 250 - 250
Total transactions Zith oZners
recognised directly in equity
Balance at 31 December 2019 825 8,900 1,011 681 (13,465 ) (2,048 ) 15,063 13,015
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Pembridge Resources plc
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Consolidated Financial Statements
Share
capital
US$’000
Share
premium
US$’000
Capital
redemption
reserve
US$’000
Other
reserve
US$’000
Retained
deȴcit
US$’000
Total
US$’000
Balance at 1 January 2019 295 2,902 1,011 66 (5,928) (1,654)
Loss for the year - - - - (5,555) (5,555)
Other comprehensive income for the year - - - - - -
Total comprehensive income for the year - - - - (5,555) (5,555)
Proceeds from shares issued 530 6,109 - - - 6,639
Direct cost of shares issued - (111) - - - (111)
Equity element of convertible loan - - - 53 - 53
Share based payments - - - 250 - 250
Total transactions Zith oZners
recognised directly in equity
530 5,998 - 303 - 6,831
Balance at 31 December 2019 825 8,900 1,011 369 (11,483) (378)
Balance at 1 January 2020 825 8,900 1,011 369 (11,483) (378)
Loss for the year - - - - (11,193) (11,193)
Other comprehensive income for the year - - - - - -
Total comprehensive income for the year - - - - (11,193) (11,193)
Proceeds from shares issued 140 322 - - - 462
Equity element of convertible loan - - - (53) - (53)
Share based payments - - - 204 - 204
Transfer to retained deȴcit after
surrender of share options
- - - (474) 474 -
Total transactions Zith oZners
recognised directly in equity
140 322 - (323) 474 613
Balance at 31 December 2020 965 9,222 1,011 46 (22,202) (10,958)
The notes form an integral part of these ȴnancial statements.
The folloZing describes the nature and purpose of each reserve Zithin Group and Company oZners’ equity:
Reserve Description and purpose
Share capital Nominal value of shares issued.
Share premium Amount subscribed for share capital in excess of nominal value, less share issue costs.
Capital redemption reserve Reserve created on cancellation of deferred shares.
Other reserve Cumulative fair value of Zarrants and share options granted, together Zith the equity element of the
convertible loan.
Translation reserve Cumulative translation adjustment from retranslation of group undertakings Zith functional currencies other than USD.
Retained deȴcit Cumulative net gains and losses recognised in the statement of comprehensive income.
Non-controlling interest Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly
or indirectly to the parent company and are presented separately in the Consolidated Statement of
comprehensive income and Zithin equity in the Consolidated statement of ȴnancial position, distinguished
from parent company shareholders’ equity.
Company statement of changes in equity
For the year ended 31 December 2020
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Pembridge Resources plc
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Consolidated Financial Statements
Note
Year Ended
31 December
2020
US$’000
Year Ended
31 December
2019
US$’000
&DVKȵRZVIURPRSHUDWLQJDFWLYLWLHV
Loss for the year (27,275 ) (13,087 )
Adjusted for:
Net ȴnance costs 2,873 1,295
Unrealised FX on debt included in administrative expenses (75 ) (169 )
Depreciation and amortisation 8,381 3,459
Tax charge / (credit) 106 (26 )
Share based payments 204 250
Revaluation of Capstone liability 9,369 -
(6,417 ) (8,278 )
Movements in Zorking capital
Decrease / (increase) in inventories 1,359 (3,248 )
Decrease / (increase) in trade and other receivables 2,995 (8,252 )
Increase / (decrease) in trade and other payables 6,735 6,752
Cash generated from / (used by) operations 4,672 (13,026 )
Income taxes recovered / (paid)- -
Net cash generated from / (used in) operating activities 4,672 (13,026 )
&DVKȵRZVIURPLQYHVWLQJDFWLYLWLHV
Payments into long-term deposits (2,737 ) (1,582 )
Purchase of property, plant and equipment (4,518 ) (490 )
Purchase of mining claims - (237 )
Net cash used in investing activities (7,255 ) (2,309 )
&DVKȵRZVIURPȴQDQFLQJDFWLYLWLHV
Interest payments (1,297 ) (497 )
Repayment of borroZings (122 ) (647 )
Proceeds from borroZings 5,471 10,754
Lease payments (5,521 ) (1,621 )
Proceeds from issuance of shares - Company 462 6,528
Proceeds from issuance of shares - Minto 3,000 1,621
1HWFDVKJHQHUDWHGIURPȴQDQFLQJDFWLYLWLHV 1,993 16,138
Net increase in cash and cash equivalents (590 ) 803
Cash and cash equivalents at beginning of year 964 151
Impact of exchange rates on cash balances 41 10
Cash and cash equivalents at end of year 19 415 964
The notes form an integral part of these ȴnancial statements.
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For the year ended 31 December 2020
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Pembridge Resources plc
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Consolidated Financial Statements
Note
Year Ended
31 December
2020
US$’000
Year Ended
31 December
2019
US$’000
&DVKȵRZVIURPRSHUDWLQJDFWLYLWLHV
Loss for the year (11,193) (5,555)
Adjusted for:
Net ȴnance costs 239 160
Unrealised FX on debt included in administrative expenses 232 -
Depreciation 37
Tax charge / (credit) --
Share based payments 204 250
Revaluation of Capstone liability 9,369 -
(1,146) (5,138)
Movements in Zorking capital
Increase in trade and other receivables (596) (1,147)
Decrease in trade and other payables (1,524) (93)
Cash used by operations (3,266) (6,378)
Income taxes recovered / (paid) --
Net cash used in operating activities (3,266) (6,378)
&DVKȵRZVIURPLQYHVWLQJDFWLYLWLHV
Payments into long-term deposits - (1,518)
Disposal/(purchase) of property, plant and equipment 5
Net cash used in investing activities - (1,513)
&DVKȵRZVIURPȴQDQFLQJDFWLYLWLHV
Interest payments - (60)
Repayment of borroZings (50) (647)
Proceeds from borroZings 2,471 2,318
Proceeds from issuance of shares 462 6,528
1HWFDVKJHQHUDWHGIURPȴQDQFLQJDFWLYLWLHV 2,883 8,139
Net (decrease)/increase in cash and cash equivalents (383) 248
Cash and cash equivalents at beginning of year 399 151
Cash and cash equivalents at end of year 19 16 399
The notes form an integral part of these ȴnancial statements.
łĶŜÒĸƗîÒŦĔƦłƑŦŰÒŰúĶúĸŰ
For the year ended 31 December 2020
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Pembridge Resources plc
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Consolidated Financial Statements
Notes to the Financial Statements
For the year ended 31 December 2020
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
copper-gold-silver mine in Yukon, Canada.
The Group’s Financial Statements are presented in United States dollars (US$), Zhich is also the functional currency of the Company, and
rounded to the nearest thousand.
2. BASIS OF PREPARATION
The Financial Statements have been prepared in accordance Zith international accounting standards in conformity Zith the Companies
Act 2006 and international ȴnancial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European
Union. The Financial Statements have been prepared under the historical cost convention, except as modiȴed for assets and liabilities
recognised at fair value on a business combination and contingent consideration measured at fair value.
The preparation of Financial Statements in conformity Zith IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a high degree of
judgement or complexity, or areas Zhere assumptions and estimates are signiȴcant to the Financial Statements, are disclosed in Note 4.
Going concern
The Financial Statements have been prepared on a going concern basis, Zhich assumes that the Company and Group Zill continue
operating in the foreseeable future and Zill be able to service their debt obligations, realise their assets and discharge their liabilities
as they fall due. The Company and Minto both have a planning, budgeting and forecasting process to determine the funds required
to support their operations and expansionary plans. The Company raised neZ equity in January 2021, Zhich is expected to support
its operations until it starts to receive repayments from Minto of its inter-company balance in 2022. At 31 December 2020, Minto
had cash of US$ 398,000 and available capacity of US$ 9.5 million under the prepayment facility Zith Sumitomo Canada Limited. The
Group’s liabilities include a contingent consideration balance of US$ 18,571,000 due to Capstone, Zhich is disclosed as a current
liability and explained fully in note 32. The amount that Zill actually be paid in respect of this obligation, and the timing thereof, is
dependent on future copper price movements, so is not certain, and there may be scope to negotiate a delay in payments beyond one
year if this is necessary. Because the liability Zould become payable in full only if copper prices remain at or above certain levels, the
same factors that Zould cause it to be payable Zould also assist the Group in funding it through increased operational cash ȵoZs. The
Group’s ability to continue as a going concern is dependent on their ability to obtain additional funding and the successful development
of their existing assets in order to meet their planned business objectives. HoZever, because there can be no assurance of this funding
or the Group’s ability to generate positive cash ȵoZs, a material uncertainty exists Zhich may cast doubt on the Group’s ability to
continue as a going concern.
At present the Group believes that there should be no signiȴcant material disruption to its mining operations from COVID-19, but the
Board continues to monitor these risks and Minto’s business continuity plans.
Having prepared forecasts based on current resources, assessing methods of obtaining additional ȴnance and assessing the possible
impact of COVID-19, the Directors believe the Group and Company have suɝcient resources to meet its obligations for a period of 12
months from the date of approval of these Financial Statements. Taking these matters into consideration, the Directors continue to adopt
the going concern basis of accounting in preparing these Financial Statements. The Financial Statements do not include the adjustments
that Zould be required should the going concern basis of preparation no longer be appropriate.
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Pembridge Resources plc
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Consolidated Financial Statements
Notes to the Financial Statements
For the year ended 31 December 2020
3. STANDARDS AND INTERPRETATIONS NOT YET APPLIED BY THE COMPANY
1HZDQGDPHQGHGVWDQGDUGVPDQGDWRU\IRUWKHȴUVWWLPHIRUWKHȴQDQFLDO\HDUEHJLQQLQJ-DQXDU\
The folloZing neZ IFRS standards and/or amendments to IFRS standards are mandatory for the ȴrst time for the Company and Group:
Standard (HFWLYHGDWH
IFRS 3 (Amendments) Business Combinations – revised deȴnition of a business 1 January 2020
IAS 1 (Amendments) Presentation of Financial Statements 1 January 2020
IAS 8 (Amendments) Accounting policies, Changes in Accounting Estimates 1 January 2020
IFRS 9, IAS 39 and IFRS 7 (Amendments) Interest rate benchmark reform 1 January 2020
The Directors believe that the adoption of these standards has not had a material impact on the ȴnancial statements other than changes
to disclosures.
6WDQGDUGVDPHQGPHQWVDQGLQWHUSUHWDWLRQVWRH[LVWLQJVWDQGDUGVWKDWDUHQRW\HWHHFWLYHDQGKDYHQRWEHHQ
adopted early by the Group or Company
The standards and interpretations that are issued, but not yet eective, up to the date of issuance of the condensed interim ȴnancial
statements are listed beloZ. The Company intends to adopt these standards, if applicable Zhen they become eective.
Standard (HFWLYHGDWH
IAS 1 (Amendments) Classiȴcation of liabilities as current or non-current 1 January 2022*
IFRS 3 (Amendments) Business Combinations – reference to the Conceptual
FrameZork
1 January 2022*
IAS 16 (Amendments) Property, plant and equipment 1 January 2022*
IAS 37 (Amendments) Provisions, Contingent Liabilities and Contingent Assets 1 January 2022*
IFRS 2018-2020 Cycle Annual Improvements 1 January 2022*
*Not yet endorsed by the EU.
The Company and Group are evaluating the impact of the neZ and amended standards above. The Directors believe that these neZ and
amended standards are not expected to have a material impact on the Company’s and Group’s results or shareholders’ funds.
36
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Pembridge Resources plc
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Consolidated Financial Statements
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, described in Note 5, the Directors are required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may dier
from these estimates.
The estimates and underlying assumptions are revieZed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in Zhich the estimate is revised if the revision aects only that period or in the period of the revision and future periods if the
revision aects both current and future periods.
Critical judgments exercised in applying accounting policies, apart from those involving estimates, that have the most signiȴcant eect on
the amounts recognised in the ȴnancial statements are as folloZs:
(FRQRPLFUHFRYHUDELOLW\DQGSUREDELOLW\RIIXWXUHHFRQRPLFEHQHȴWVRIPLQHUDOH[SORUDWLRQHYDOXDWLRQDQGGHYHORSPHQWFRVWV
The Company has determined that exploratory drilling, evaluation, development, and related costs incurred, Zhich Zere capitalised, have
future economic beneȴts and are economically recoverable. In making this judgment, the Company has assessed various sources of
information including, but not limited to, the geologic and metallurgic information, history of conversion of mineral deposits to proven and
probable reserves, scoping and feasibility studies, proximity to existing ore bodies, existing permits, and life of mine plans.
)LQDQFLDOLQVWUXPHQWV
Financial assets and liabilities are designated upon inception to various classiȴcations. The designation determines the method by Zhich the
ȴnancial instruments are carried on the balance sheet subsequent to inception and hoZ changes in value are recorded. The designation may
require the Company to make certain judgments, taking into account management’s intention of the use of the ȴnancial instruments.
&RQVROLGDWLRQRIHQWLWLHVLQZKLFKWKH*URXSKROGVOHVVWKDQDPDMRULW\RIYRWLQJULJKWVHFRQRPLFLQWHUHVW
The Company considers that, although it has an economic interest of less than 50 in Minto’s results and net assets, it has control over Minto
through holding 100 of voting rights and having control of the Minto Board, Zhich means that it is able to control the day-to-day operations
of the mine.
The folloZing are the critical estimates that the Directors have made in the process of applying the Group’s accounting policies and that have
the most signiȴcant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the Financial Statements.
(VWLPDWHGUHFODPDWLRQDQGFORVXUHFRVWV
The Group’s provision for reclamation and closure cost obligations represents management’s best estimate of the present value of the future
cash outȵoZs required to settle the liability. The provision reȵects estimates of future costs directly attributable to remediating the liability,
inȵation, movements in foreign exchange rates and assumptions of risks associated Zith the future cash outȵoZs, and the applicable risk-free
interest rates for discounting future cash outȵoZs. Changes in the factors above can result in a change to the provision recognised by the
Group. To the extent the carrying value of the related mining property is not increased above its recoverable amount, changes to reclamation
and closure cost obligations are recorded Zith a corresponding change to the carrying amounts of related mining properties.
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Deferred tax assets and liabilities are determined based on dierences betZeen the ȴnancial statement carrying values of assets and
liabilities and their respective income tax bases (“temporary dierences”), and losses carried forZard. Deferred tax assets are recognised
for unused tax losses to the extent that it is probable that taxable proȴt Zill be available against Zhich the losses can be utilised.
The determination of the ability of the Group and Company to utilise tax loss carry-forZards to oset deferred tax liabilities requires
management to exercise judgment and make certain assumptions about the future performance of the Group and Company.
Management is required to assess Zhether it is probable that the Group and Company Zill beneȴt from these prior losses and other
deferred tax assets, and Zhat tax rates are expected to be in eect Zhen temporary dierences reverse. Changes in economic conditions,
metal prices and other factors could result in revisions to the estimates of the beneȴts to be realised or the timing of utilizing the losses.
0LQHUDOUHVHUYHDQGUHVRXUFHHVWLPDWHV
The ȴgures for mineral reserves and mineral resources are determined in accordance Zith National Instrument 43-101, “Standards
of Disclosure for Mineral Projects”, issued by the Canadian Securities Administrators. There are numerous uncertainties inherent in
estimating mineral reserves and mineral resources, including many factors beyond the Group’s control. Such estimation is a subjective
process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data
and of the assumptions made and judgments used in engineering and geological interpretation. Dierences betZeen management’s
assumptions, including economic assumptions such as metal prices, and the market conditions could have a material eect in the future
on the Group’s ȴnancial position and results of operation. Such dierences could increase or decrease the mine’s revenues and may
aect the rate of depreciation for mineral properties and of other ȴxed assets Zhose useful life is determined by the amount of reserves.
Notes to the Financial Statements
For the year ended 31 December 2020
37
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Pembridge Resources plc
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Consolidated Financial Statements
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (continued)
(VWLPDWHGSHUPLWWHGUHVHUYHV
The carrying amounts of the Group’s producing mining properties are depleted based on permitted reserves. Changes to estimates of
permitted reserves and depletable costs including changes resulting from revisions to the Group’s mine plans and changes in metal price
forecasts can result in a change to future depletion rates.
'HSUHFLDWLRQDQGDPRUWLVDWLRQUDWHIRUSURSHUW\SODQWDQGHTXLSPHQWDQGGHSOHWLRQUDWHVIRUPLQLQJLQWHUHVWV
Depletion, depreciation, and amortisation expenses are allocated based on estimated asset lives. Should the asset life, depletion rates, or
depreciation rates dier from the initial estimate, an adjustment Zould be made in the statement of (loss) / income on a prospective basis.
ΔPSDLUPHQWRIPLQHUDOSURSHUWLHVSODQWDQGHTXLSPHQW
Management considers both external and internal sources of information in assessing Zhether there are any indications that the Group’s
mineral properties, plant and equipment are impaired and Zhether previously recorded impairments should be reversed. External
sources of information management considers include changes in the market, economic and legal environment in Zhich the Group
operates that are not Zithin its control and aect the recoverable amount of its mineral properties, plant and equipment. Internal sources
of information that management considers include the manner in Zhich mineral properties, plant and equipment are being used or are
expected to be used and indications of economic performance of the assets.
In determining the recoverable amounts of the Group’s mineral properties, plant and equipment, management makes estimates of the
future operating results and discounted net cash ȵoZs expected to be derived from the Group’s mining properties, costs to sell the mining
properties and the appropriate discount rate. Reductions in metal price forecasts, increases in estimated future costs of production,
increases in estimated future non-expansionary capital expenditures, reductions in the amount of recoverable mineral reserves, mineral
resources, and exploration potential, and/or adverse current economics can result in a Zrite-doZn of the carrying amounts of the Group’s
mineral properties, plant and equipment.
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Consumable parts and supplies, ore stockpiles and concentrates, are valued at the loZer of cost and net realizable value. Estimates in
the carrying values of inventories arise due to the nature of the valuation of ore stockpiles and concentrates based on an appropriate
allocation of direct mining costs, direct labour and material costs, mine site overhead, and depletion and amortization.
9DOXDWLRQRIȴQDQFLDOLQVWUXPHQWVLQFOXGLQJHVWLPDWHVXVHGLQSURYLVLRQDOSULFLQJFDOFXODWLRQV
Financial instrument estimates are based on either unadjusted quoted prices in active markets or direct or indirect observable inputs in
accordance Zith the deȴnitions of the ȴnancial instruments. Provisional pricing calculations are determined based on the change in the
value of forZard commodity prices of metals. To account for the change in metal prices from the total contract value to the 90 of the
provisional value amount that has been received, estimates of the value of concentrates are used to determine the provisionally priced
concentrate receivables at each period.
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Estimating fair value for share based payment transactions requires determination of the most appropriate valuation model, Zhich is
dependent on the terms and conditions of the grant of share options and Zarrants. This estimate also requires determination of the most
appropriate inputs to the valuation model including the expected life, volatility and dividend yield and making assumptions about them.
The assumptions used for estimating fair value for share based payment transactions are disclosed in Note 25.
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Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business
combination. The determination of fair value is based on key assumptions involving estimation of the probability of meeting each
performance target and the timing thereof. As part of the acquisition of Minto, contingent consideration Zith an estimated fair value of
US$9,202,000 Zas recognised at the acquisition date. See Note 32 for further details. The Group is required to remeasure the contingent
liability at fair value at each reporting date Zith changes in fair value recognised in accordance
Zith IFRS 9. Such remeasurement involves
making key assumptions around future copper price volatility and assumptions over inputs to the Monte Carlo simulation model.
Notes to the Financial Statements
For the year ended 31 December 2020
38
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Pembridge Resources plc
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Consolidated Financial Statements
5. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation and Business combinations
The consolidated Financial Statements comprise the Financial Statements of the company and its subsidiaries as at 31 December 2020.
Control is achieved Zhen the Group is exposed, or has rights, to variable returns from its involvement Zith the investee and has the ability
to aect those returns through its poZer over the investee. Speciȴcally, the Group controls an investee if the Group has:
(i) PoZer over the investee i.e. existing rights that give it the current ability to direct the relevant activities of the investee
(ii) Exposure, or rights to, variable returns from its involvement Zith the investee
(iii) The ability to use its poZer over the investee to aect its returns
Generally there is a presumption that a majority of voting rights results in control. When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing Zhether it has poZer over an
investee, including:
(i) The contractual arrangements Zith the other vote holders of the investee
(ii) Rights arising from other contractual arrangements
(iii) The Group’s voting rights and potential rights
Consolidation of a subsidiary begins Zhen a Group obtains control over a subsidiary and ceases Zhen the Group loses control of
the subsidiary. Proȴt or loss and each component of Other Comprehensive Income (ȆOCI’) are attributed to the equity holders of the
Company and to the non-controlling interest, even if this results in the non-controlling interest having a deȴcit balance. When necessary,
adjustments are made to the ȴnancial statements of subsidiaries to bring their accounting policies in line Zith the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash ȵoZs relating to transactions betZeen members of the
Group are eliminated in full on consolidation.
A change in the oZnership interest of a subsidiary, Zithout a loss of control, is accounted for as an equity transaction.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, Zhich is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquire.
Acquisition related costs are expensed as incurred and included in administrative expenses. Identiȴable assets acquired and liabilities
and contingent liabilities assumed in a business combination are, Zith limited exceptions, measured initially at their fair values at the
acquisition date.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration
classiȴed as a liability and Zithin the scope of IFRS 9 is measured at fair value Zith the changes in fair value recognised in proȴt or loss.
Reporting foreign currency transactions in functional currency
In preparing the Financial Statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are
recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at the rates prevailing at the date
Zhen the fair value Zas determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange dierences arising,
if any, are recognised in proȴt or loss.
Translation from functional currency to presentational currency
When the functional currency of a Group entity is dierent from the Group’s presentational currency (US dollars), its results and ȴnancial
position are translated into the presentational currency as folloZs:
(i) Assets and liabilities are translated using exchange rates prevailing at the balance sheet date.
(ii) Income and expense items are translated at average exchange rates for the year, except Zhere the use of such average rates does
not approximate the exchange rate at the date of a speciȴc transaction, in Zhich case the transaction rate is used..
(iii) All resulting exchange dierences are recognised in other comprehensive income and presented in the translation reserve in
equity and are reclassiȴed to proȴt or loss in the period in Zhich the foreign operation is disposed of.
Inventories
Inventories for consumable parts and supplies, ore stockpiles and concentrates, are valued at the loZer of cost and net realisable
value. Costs allocated to consumable parts and supplies are based on average costs and include all costs of purchase, conversion and
other costs in bringing these inventories to their existing location and condition. Costs allocated to ore stockpiles and concentrates are
based on average costs, Zhich include an appropriate share of direct mining costs, direct labour and material costs, mine site overhead,
depreciation and amortisation. If carrying value exceeds net realisable amount, a Zrite doZn is recognised. The Zrite doZn may be
reversed in a subsequent period if the circumstances Zhich caused it no longer exist.
Notes to the Financial Statements
For the year ended 31 December 2020
39
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Pembridge Resources plc
|
Consolidated Financial Statements
5. SIGNIFICANT ACCOUNTING POLICIES (continued)
Mineral properties, plant and equipment
Title to mineral properties involves certain inherent risks due to the diɝculties of determining the validity of certain claims as Zell as the
potential for problems arising from the frequently ambiguous conveyancing historical characteristic of many properties. The Group has
investigated title to all of its mineral properties and, to the best of its knoZledge, title to all of its properties is in good standing.
Producing mineral properties
Producing mineral properties are recorded at cost less accumulated depletion and impairment charges. The costs associated Zith
producing mineral properties include acquired interests in production stage properties representing the fair value at the time they Zere
acquired. Producing mineral properties also include additional capitalised costs after initial acquisition. Upon sale or abandonment of
producing mineral properties, the carrying value is derecognised and any gains or losses thereon are included in proȴt or loss.
Mineral exploration and development properties
The carrying amount of mineral exploration and development properties comprise costs that are directly attributable to:
• researching and analysing existing exploration data;
• conducting geological studies, exploratory drilling and sampling;
• examining and testing extraction and treatment methods; and
• activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.
The costs associated Zith mineral exploration and development properties include acquired interests in development and exploration
stage properties representing the fair value at the time they Zere acquired. Mineral exploration and development properties related to
greenȴeld properties, Zhich are prospective in nature and not yet supported by an internal economic assessment, are expensed in the
statement of (loss) / income, except for acquisition costs and mining interest rights. Exploration and development expenses related to
broZnȴeld mineral properties are capitalised provided that one of the folloZing conditions is met:
• Such costs are expected to be recouped in full through successful development and exploitation of the area of interest or
alternatively, by its sale; or
• Exploration and evaluation activities in the area of interest have not yet reached a stage Zhich permits a reasonable assessment of
the existence of economically recoverable reserves, hoZever active and signiȴcant operations in relation to the area are continuing,
or planned for the future.
The carrying values of capitalised amounts of mineral exploration and development properties are revieZed Zhen there are indicators
of impairment at each reporting date. In the case of undeveloped projects, there may be only inferred mineral resources to alloZ
management to form a basis for the impairment revieZ. The revieZ is based on the Company’s intentions for development of such a
project. If a project does not prove viable, all unrecoverable costs associated Zith the project are charged to proȴt or loss at the time the
determination is made.
Once management has determined that the development potential of the property is economically viable and the necessary permits are in
place for its development, the costs of the exploration asset are reclassiȴed to producing mineral properties.
Plant and equipment
Plant and equipment are recorded at cost less accumulated depreciation and impairment losses. Plant and equipment includes in its
purchase price, any costs directly attributable to bringing plant and equipment to the location and condition necessary for it to be capable
of operating in the manner intended by management and the estimated close doZn and restoration costs associated Zith dismantling
and removing the asset. Upon sale or abandonment of any plant and/or equipment, the cost and related accumulated amortization and
impairment losses, are Z
ritten o and any gains or losses thereon are included in proȴt or loss.
Notes to the Financial Statements
For the year ended 31 December 2020
40
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Pembridge Resources plc
|
Consolidated Financial Statements
5. SIGNIFICANT ACCOUNTING POLICIES (continued)
Construction in progress
Mineral property development and plant and equipment construction commences Zhen approved by management and/or the Board
and the Company has obtained all regulatory permissions to proceed. Development and construction expenditures are capitalised and
classiȴed as construction in progress. Once completed, the costs associated Zith all applicable assets related to the development and
construction are reclassiȴed to the appropriate category Zithin mineral properties or plant and equipment.
Depreciation and amortisation of mineral properties, plant and equipment
The carrying amounts of mineral properties, plant and equipment are depreciated or amortised to their estimated residual value over
the estimated economic life of the speciȴc assets to Zhich they relate, using the depreciation or amortisation methods and rates as
indicated beloZ. Estimates of residual values and useful lives are reassessed annually and any change in estimate is taken into account
in the determination of the remaining amortisation rate. Amortisation commences on the date the asset is available for its use as
intended by management.
Depreciation and amortisation is computed using the folloZing rates:
Item Methods Rates
Mineral properties Units of production Estimated proven, probable and permitted mineral reserves
Plant, equipment and motor vehicles Straight line, units of production 4 – 10 years, Estimated proven and probable mineral reserves
Right of use assets under leases –
plant and equipment
Straight line Lesser of lease term and estimated useful life
Impairment of long-lived assets
At each reporting date, the Group and Company revieZ the carrying amounts of its assets to determine Zhether there are any indicators
of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment, if any.
Where the asset does not generate cash inȵoZs that are independent from other assets, the Company estimates the recoverable amount
of the cash generating unit (“CGU”) to Zhich the asset belongs. The recoverable amount is determined as the higher of fair value less
direct costs to sell and the asset or CGU’s value in use. In assessing recoverable amount, the estimated future cash ȵoZs are discounted
to their present value. Estimated future cash ȵoZs are calculated using estimated recoverable mineral reserves, estimated future
commodity prices and the expected future operating and capital costs. The projected cash ȵoZs are aected by changes in assumptions
about metal selling prices, future capital expenditures, production cost estimates, discount rates, and exchange rates. The discount rate
applied to the estimated future cash ȵoZs reȵects current market assessments of the time value of money and the risks speciȴc to the
asset for Zhich the future cash ȵoZ estimates have not been adjusted. Determining the discount rate includes appropriate adjustments
for the risk proȴle of the country in Zhich the individual asset or CGU operates.
If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its
recoverable amount and an impairment loss is recognised in the statement of (loss) / income. Assets that have been impaired are
tested for possible reversal of the impairment Zhenever events or changes in circumstance indicate that the impairment may have
reversed. Where an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate
of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that Zould have been
determined (net of amortization or depletion) had no impairment loss been recognised for the asset or CGU in prior periods. A reversal of
impairment is recognised in proȴt or loss.
Taxes
Income tax represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable result for the period. Taxable proȴt or loss diers from reported proȴt or loss because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on dierences betZeen the carrying amounts of assets and liabilities
in the Financial Statements and the corresponding tax bases used in the computation of taxable proȴ
t, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary dierences, and deferred
tax assets are recognised to the extent that it is probable that taxable proȴts Zill be available against Zhich deductible temporary
dierences can be utilised.
Notes to the Financial Statements
For the year ended 31 December 2020
41
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Pembridge Resources plc
|
Consolidated Financial Statements
5. SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred tax is calculated at the tax rates that are expected to apply in the period Zhen the liability is settled or the asset is realised.
Deferred tax is charged or credited in proȴt or loss, except Zhen it relates to items charged or credited directly to equity, in Zhich case
the deferred tax is also dealt Zith in equity. Tax relating to items recognised in other comprehensive income is recognised in other
comprehensive income.
Deferred tax assets and liabilities are oset Zhen there is a legally enforceable right to set o current tax assets against current tax
liabilities and Zhen they relate to taxes levied by the same taxation authority and the Company intends to settle its current tax assets and
liabilities on a net basis.
Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax. This is
considered to be the case as they are imposed under government authority and the amount payable is calculated by reference to revenue
derived (net of any alloZable deductions) after adjustment for items comprising temporary dierences.
Compound instruments and borrowings
The component parts of compound instruments are classiȴed separately as ȴnancial liabilities and equity in accordance Zith the
substance of the contractual agreement. At the date of issue, the fair value of the liability component is estimated using the prevailing
market interest rate for similar debt instruments. This amount is recorded as a liability on an amortised cost basis until extinguished upon
conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component
from the fair value of the compound instrument as a Zhole. This is recognised and included in equity, net of income tax eects, and is not
subsequently remeasured.
BorroZings are classiȴed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
BorroZing costs are expensed in the period in Zhich they are incurred.
Financial instruments
On initial recognition, ȴnancial assets are recognised at fair value and are subsequently classiȴed and measured at: (i) amortised cost; (ii)
fair value through other comprehensive income (“FVOCI”); or (iii) fair value through proȴt or loss (“FVTPL). The classiȴcation of ȴnancial
assets is generally based on the business model in Zhich a ȴnancial asset is managed and its contractual cash ȵoZ characteristics. A
ȴnancial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for ȴnancial assets at
FVTPL Zhere transaction costs are expensed. All ȴnancial assets not classiȴed and measured at amortised cost or FVOCI are measured
at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present
subsequent changes in the investment’s fair value in OCI.
The classiȴcation determines the method by Zhich the ȴnancial assets are carried on the statement of ȴnancial position subsequent to
inception and hoZ changes in value are recorded. Accounts receivable are measured at amortised cost Zith subsequent impairments
recognised in the statement of (loss) / income. Concentrate receivables and derivative assets are measured at FVTPL Zith subsequent
changes recognised in proȴt or loss.
The mark-to-market adjustments for provisional pricing changes on concentrate receivables are based on forZard commodity prices of
metals and are included in revenues until ȴnal settlement.
Financial liabilities are designated as either: (i) fair value through proȴt or loss; or (ii) amortised cost. All ȴnancial liabilities are classiȴed
and subsequently measured at amortised cost except for ȴnancial liabilities at FVTPL. The classiȴcation determines the method by Zhich
the ȴnancial liabilities are carried on the statement of ȴnancial position subsequent to inception and hoZ changes in value are recorded.
Accounts payable and accrued liabilities are classiȴed as amortised cost and carried on the statement of ȴnancial position at amortised
cost. All interest and other borroZing costs incurred in connection Zith the above are expensed as incurred and reported as part of
ȴnancing costs in the statement of comprehensive income. The Company derecognises ȴnancial liabilities Zhen, and only Zhen, the
Company’s obligations are discharged, cancelled or they expire.
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Fair value is the price that Zould be received to sell an asset or paid to transfer a liability in an orderly transaction betZeen market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most
advantageous market for the asset or liability.
A fair value measurement of a non-ȴnancial asset takes into account a market participant’s ability to generate economic beneȴts by using
the asset in its highest and best use or by selling it to another market participant that Zould use the asset in its highest and best use.
Notes to the Financial Statements
For the year ended 31 December 2020
42
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Pembridge Resources plc
|
Consolidated Financial Statements
5. SIGNIFICANT ACCOUNTING POLICIES (continued)
All assets and liabilities for Zhich fair value is measured or disclosed in the Financial Statements are categorised Zithin the fair value
hierarchy described as folloZs:
(i) Level 1 – quoted market prices in active markets for identical assets or liabilities
(ii) Level 2 – valuation techniques for Zhich the loZest level input that is signiȴcant to the fair value measurement is directly or
indirectly observable
(iii) Level 3 – valuation techniques for Zhich the loZest level input that is signiȴcant to the fair value measurement is unobservable
External valuers are involved for the valuation of assets and liabilities acquired in a business combination, and signiȴcant liabilities such as
contingent consideration.
Trade receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain signiȴcant ȴnancing
components. They are subsequently measured at amortised cost using the eective interest method, less loss alloZance.
ΖPSDLUPHQWDQGXQFROOHFWLELOLW\RIȴQDQFLDODVVHWV
An Ȇexpected credit loss’ impairment model applies Zhich requires a loss alloZance to be recognised based on expected credit losses.
This applies to ȴnancial assets measured at amortised cost. The estimated present value of future cash ȵoZs associated Zith the asset is
determined and an impairment loss is recognised for the dierence betZeen this amount and the carrying amount as folloZs: the carrying
amount of the asset is reduced to estimated present value of the future cash ȵoZs associated Zith the asset, discounted at the ȴnancial
asset’s original eective interest rate, either directly or through the use of an alloZance account and the resulting loss is recognised in
proȴt or loss for the period.
In a subsequent period, if the amount of the impairment loss related to ȴnancial assets measured at amortised cost decreases, the
previously recognised impairment loss is reversed through proȴt or loss to the extent that the carrying amount of the investment at the
date the impairment is reversed does not exceed Zhat the amortised cost Zould have been had the impairment not been recognised.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand and deposits held at call Zith banks. Any interest earned is accrued monthly and
classiȴed as ȴnance income. For the purposes of the statement of cash
ȵoZs, cash and cash equivalents consist of cash and cash
equivalents as deȴned above.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group and Company prior to the end of the ȴnancial year Zhich
are unpaid. Trade and other payables are presented as current liabilities unless payment is not due Zithin 12 months after the reporting
period. They are recognised initially at their fair value and subsequently measured at amortised cost using the eective interest method.
Leases
The Group recognises lease liabilities in relation to leases other than leases of loZ-value assets and short-term leases (shorter than tZelve
months). The lease liabilities are calculated at the present value of the remaining lease payments, discounted using the interest rate
implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borroZing
rate is used, calculated as the local government bond rate plus an interest rate spread. In cases Zhere there is an option to terminate or
extend a lease, the duration of the lease assumed for this purpose reȵected the Group’s existing intentions regarding such options. Lease
liabilities include the net present value of the folloZing lease payments:
• ȴxed payments (including in-substance ȴxed payments), less any lease incentives receivable
• variable lease payments that are based on an index or a rate
• amounts expected to be payable by the lessee under residual value guarantees
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reȵects the lessee exercising that option.
The right of use asset is measured initially at the amount equal to the lease liability, plus any costs of bring the asset into use. The right-of-
use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Reclamation and closure cost obligations
A reclamation and closure cost obligation is recognised for close doZn, restoration and environmental rehabilitation costs (Zhich include the
dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the ȴnancial period Zhen
the related environmental disturbance occurs, based on the estimated future costs using information available at the balance sheet date. At
the time of establishing the provision, a corresponding asset is capitalised, Zhere it gives rise to a future beneȴt, and amortised over future
production from the operations to Zhich it relates. The provision is discounted using a current market-based pre-tax discount rate and the
unZinding of the discount is included in proȴt or loss as interest expense from discounting reclamation and closure cost obligations.
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
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Consolidated Financial Statements
5. SIGNIFICANT ACCOUNTING POLICIES (continued)
The obligation is revieZed each reporting period for changes to obligations, legislation or discount rates that impact estimated costs or lives
of operations. The cost of the related asset is adjusted for changes in the provision resulting from changes in the estimated cash ȵoZs or
discount rate and the adjusted cost of the asset is amortised prospectively.
Provisions
Provisions are recognised Zhen the Company has a present obligation (legal or constructive), as a result of past events, and it is probable
that an outȵoZ of resources that can be reliably estimated Zill be required to settle the obligation. The amount recognised as a provision
is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks
and uncertainties surrounding the obligation. Where the eect is material, the provision is discounted to net present value using an
appropriate current market-based pre-tax discount rate and the unZinding of the discount is included in proȴt or loss as interest expense
from discounting obligations.
Revenue recognition
Sales are recognised and revenue is recorded at market prices folloZing the transfer of title and risk of oZnership, provided that collection
is reasonably assured, the price is reasonably determinable, the Company has no signiȴcant continuing involvement, and the costs
incurred or to be incurred in respect of the transaction can be measured readily. The Company’s metal concentrates are sold under
a pricing arrangement Zhere ȴnal prices are determined by quoted market prices in a period subsequent to the date of sale. Until
prices are ȴnal, revenues are recorded based on forZard market prices for the expected period of ȴnal settlement, net of costs such
as transportation and reȴning Zhich Zill be incurred in completing the transaction. Subsequent variations in the ȴnal determination
of the metal concentrate Zeight and assay are recognised as revenue adjustments as they occur until ȴnalised. Subsequent variations
in the ȴnal determination of the price are treated as a remeasurement of a ȴnancial asset under IFRS 9 and are recognised as revenue
adjustments as they occur until ȴnalised.
Government grants
In response to the COVID-19 pandemic, governments have assisted companies in various Zays. During the year ended 31 December
2020, the Group received US$ 1.6 million of emergency Zage subsidy from the Government of Canada. Under IAS 20 – Accounting for
Government Grants and Disclosure of Government Assistance, this may be recognised as either income or a reduction of the expenses
related to the grant. The Zage subsidy relates to production expenses and has been recognised as a reduction to payroll expense in
these consolidated ȴnancial statements and not separately disclosed as other income.
(PSOR\HHEHQHȴWV
Liabilities for Zages and salaries, including non-monetary beneȴts and annual leave, that are expected to be settled Zholly Z
ithin 12
months after the end of the period in Zhich the employees render the related service are recognised in respect of employees’ services up
to the end of the reporting period and are measured at the amounts expected to be paid Zhen the liabilities are settled.
Earnings per share
Basic earnings (loss) per share is computed by dividing net earnings available (attributable) to common shareholders by the Zeighted
average number of common shares outstanding during the period. The computation of diluted earnings (loss) per share assumes the
conversion, exercise or contingent issuance of securities only Zhen such conversion, exercise or issuance Zould have a dilutive eect on
earnings (loss) per share.
The dilutive eect of convertible securities is reȵected in diluted earnings (loss) per share by application of the “if converted” method.
Investment in subsidiary
The Company recognises its investments in subsidiaries at cost, less any provision for impairment.
Share capital
Ordinary shares are classiȴed as equity. Incremental costs directly attributable to the issue of neZ ordinary shares are shoZn in equity as
a deduction from proceeds.
Share based payments
The fair value of services received from employees and third parties in exchange for the grant of share options and Zarrants is recognised
as an expense, except for those granted in connection Zith the issue of neZ ordinary shares Zhich are shoZn as a deduction in equity. A
corresponding increase is recognised in other reserves in equity. The fair value of the share options and Zarrants is calculated using an
appropriate valuation model. At each reporting period end the Company revises its estimate of the number of options that are expected
to become exercisable. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and
share premium Zhen exercised.
Notes to the Financial Statements
For the year ended 31 December 2020
44
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Pembridge Resources plc
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Consolidated Financial Statements
6. OPERATING SEGMENTS
Operating segments are reported in a manner consistent Zith the internal reporting provided to the Board, Zho are responsible for
allocating resources and assessing performance of the operating segment.
The Group has one operating segment, being copper mining (of Zhich gold and silver are by-products), therefore all IFRS 8 disclosures are
incorporated Zithin other notes to the Financial Statements.
7. REVENUE FROM CONTRACTS WITH CUSTOMERS
Year Ended
31 December
2020
US$’000
Year Ended
31 December
2019
US$’000
Copper 53,721 12,789
Gold 10,772 1,579
Silver 204 54
Total gross revenue 64,697 14,422
Less: treatment and selling costs (6,419) (2,024)
Revenue 58,278 12,398
All revenue comprises the sale of metal concentrate to one customer.
When considering the recognition of revenue, IFRS 15 requires preparers to go through ȴve steps Zhich Zill determine the timing and
quantum of the revenue recognised at a given time.
1 Identify contract with a customer
Since acquisition, and through 2020, Minto sells its concentrate to only end customer, Zhich is Sumitomo, under an otake agreement. Sales
of copper are made direct to Sumitomo and sale of gold and silver are made to Sumitomo via Wheaton, hence the valuation of the gold and
silver revenues is determined by Minto’s contract Zith Wheaton but timing of revenue recognition for them is the same as for copper.
2 Identify performance obligation
The performance obligation is the sale of copper, gold and silver concentrate to Sumitomo, including its transportation to a location
speciȴed by them in Japan. At the end of each month, under the otake agreement, Minto Zeighs and assays the concentrate it has
produced and Sumitomo takes title to it, paying Minto a provisional payment of 90 of its value. Minto must keep the concentrate
separate from any other product in a location approved by Sumitomo and may not sell it to any other party. From this point, Minto has
control over the concentrate and, if it is still physically in Minto’s care, Minto is acting as its custodian for Sumitomo.
3 Determine the transaction price
The Company’s metal concentrates are sold under a pricing arrangement Zhere ȴnal prices are determined by quoted market prices in
a period subsequent to the date of sale. Until prices are ȴnal, revenues are recorded based on forZard market prices for the expected
period of ȴnal settlement. Subsequent variations in the ȴnal determination of the metal concentrate Zeight and assay are recognised
as revenue adjustments as they occur until ȴnalised. Subsequent variations in the ȴnal determination of the price are treated as a
remeasurement of a ȴnancial asset under IFRS 9 and are recognised as revenue adjustments as they occur until ȴnalised.
Allocate price to each performance obligation
There is one overarching performance obligation, Zhich is the delivery of metal concentrates to Sumitomo. This includes the production
of the concentrates and their transportation to Japan. Their transportation does not carry signiȴcant risks or reZards and its cost can be
estimated in advance, so the revenue is recognised net of that cost until it is delivered.
5 Recognise revenue when the performance obligation is satisȴed by transferring good or service to customer
(ie the customer obtains control)
Because Sumitomo gains control over the concentrate at the end of each month, even if it is on the Minto site, and its subsequent
transportation does not carry signiȴcant risks or reZards, the main obligation is satisȴed Zhen Sumitomo takes title and the revenue is
booked at this time, net of costs such as transportation and reȴning Zhich Zill be incurred in completing the transaction.
Notes to the Financial Statements
For the year ended 31 December 2020
45
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Pembridge Resources plc
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Consolidated Financial Statements
8. OPERATING LOSS
Audit fees and sta costs are shoZn in notes 9 and 10.
The exceptional charge of $9,369,000 in 2020 relates to the mark-to-market revaluation of the Capstone liability. Because the payments
are dependent on certain conditions related to production and copper prices being met, they are not certain in amount or timing. The
copper price at the end of 2020 Zas considerably higher, and the market outlook more positive, than at the end of 2019 so the probability
of making the payments dependent on them has correspondingly increased. The revised Shareholders’ Agreement betZeen the Company
and its felloZ investors in Minto provides that Minto may fund the deferred consideration payments due from Pembridge to Capstone
and it is expected that this Zill happen. The impact of this exceptional charge on the division of 2020 losses betZeen shareholders of the
Company and the non-controlling interest is shoZn beloZ.
Loss attributable to
Shareholders of the Company
US$’000
Loss attributable to
non-controlling interest
US$’000
Total loss
US$’000
Loss of Minto (3,538) (12,544) (16,082)
Company loss before exceptional item (1,824) - (1,824)
Revaluation of Capstone liability (9,369) - (9,369)
(14,731) (12,544) (27,275)
Exceptional items charged in 2019 related to the acquisition of Minto and the re-listing of the Company’s shares. They comprised legal and
listing fees of $609,000 and bonuses to directors and sta of the Company that Zere contingent on the acquisition and re-listing of $1,738,000.
9. AUDITOR’S REMUNERATION
Year Ended
31 December
2020
US$’000
Year Ended
31 December
2019
US$’000
Remuneration receivable by the Company’s auditors for the audit of the Financial Statements 48 53
Fees payable to the Company’s auditor and its associates for other services - 39
Total remuneration 48 92
10. EMPLOYEES AND KEY MANAGEMENT
During the year, the Group received US$ 1.6 million of emergency Zage subsidy from the Government of Canada due to the Covid-19
pandemic. The Zage subsidy relates to production expenses and has been recognised as a reduction to payroll expense in these
consolidated ȴnancial statements.
The total Directors’ emoluments for the year, including share based payments, Zere US$1,997,000 (2018 - US$419,000). Detailed
disclosure of Directors’ remuneration is disclosed in the Directors’ remuneration report on page 17.
The average number of employees in the Group during the year Zas 107 (2019 – 34) and in the Company Zas 3 (2019 – 4).
Key management personnel as deȴned under IAS 24 have been identiȴed as only the Board of Directors.
Notes to the Financial Statements
For the year ended 31 December 2020
46
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Pembridge Resources plc
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Consolidated Financial Statements
10. EMPLOYEES AND KEY MANAGEMENT (continued)
Group
Year ended
31 December
2020
US$’000
Group
Year ended
31 December
2019
US$’000
Company
Year ended
31 December
2020
US$’000
Company
Year ended
31 December
2019
US$’000
6WDFRVWV
Wages and salaries 10,349 5,878 766 2,579
Redundancy costs - 668 - 668
Social security costs 284 391 95 391
Injury protection and health insurance 175 270 18 -
Pensions 272 65 10 10
Share based payments 204 250 204 250
11,284 7,522 1,093 3,898
11. RELATED PARTY TRANSACTIONS
The Company has borroZings from its Chairman and CEO, Gati Al-Jebouri, Zhich incur interest of 10 per annum and are repayable
on 31 December 2022. The Company also pays an arrangement fee in the amount of 6 of the amounts draZn doZn under the
Convertible Loan. Under this facility, the Company had borroZed e3,430,000 at 31 December 2020. The background and changes to this
arrangement during the year are set out beloZ.
As previously disclosed in the ȴnancial statements for the year ended 31 December 2019, on 30 October 2019, the Company entered
into a convertible loan facility of e1.7 million Zith Gati Al-Jebouri. The loan Zas to be repaid by 25 October 2021 and carried interest at an
annual rate of 8. The Company also paid an arrangement fee in the amount of 6 of the amounts draZn doZn under the Convertible
Loan. Of this facility, e1.5 million had been borroZed at 31 December 2019. At any time prior to the Termination Date Mr Al-Jebouri
could elect to convert all or part of the Convertible Loan into ordinary shares of nominal value 1 pence each in the capital of the Company
(“Ordinary Shares”), to be issued at 12.5 pence per share, provided that such election Zould not place the lender’s shareholding above
29.9 of the total issued share capital of the Company. The Company could elect to repay any portion of the Convertible Loan at any point
prior to the Termination Date, provided alZays that the Lender Zill have the option to have such repayment made in Ordinary Shares, to
be issued at the Conversion Price.
On 16 April 2020, the terms of this loan Zere changed as folloZs:
• removing the right of Mr. Al-Jebouri to convert any of the loans to shares in the Company;
• the maturity date of the loans Zas extended from 25 October 2021 to 31 December 2022. The extension in maturity corresponds
Zith the Company’s expectations Zith regard to inȵoZ of funds from Minto Explorations Ltd to the Company; and
• In consideration for these changes, the Company agreed to increase the interest rate on the loan from 8 to 10 Zith eect from
1 May 2020, Zith the accumulated interest to be paid only at the maturity date of the loan Zith no interim payments.
During 2019, the Company also entered into the folloZing related party transactions Zith its Directors in order to fund Zorking capital:
a) On 28 August 2018, the Company borroZed e200,000 from Frank McAllister. The loan had no ȴxed term, but Zas due to be
repaid Zithin 30 days of the Company being re-listed. The loan carried an interest rate of 10 per annum, payable semi-annually
in arrears.
b) On 13 December 2018, the Company borroZed e40,000 from Frank McAllister. The loan had a tZo year term, and carried an
interest rate of 20 per annum, payable semi-annually in arrears.
c) on 20 December 2018, the Company borroZed e40,000 from Guy Le Bel. The loan had a tZo year term, and carried an interest
rate of 20 per annum, payable semi-annually in arrears.
d) on 25 February 2019, the Company borroZed e40,000 from Gati Al-Jebouri. The loan had a tZo year term, and carried an interest
rate of 20 per annum, payable semi-annually in arrears. On 19 June the Company borroZed an additional e11,033 from him on
the same terms.
Upon re-listing on 16 December 2019, the above loans and accrued interest thereon Zere settled in shares.
Notes to the Financial Statements
For the year ended 31 December 2020
47
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Pembridge Resources plc
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Consolidated Financial Statements
12. FINANCE COSTS
Year Ended
31 December
2020
US$’000
Year Ended
31 December
2019
US$’000
Interest on loans - Pembridge 461 109
Interest on loans - Minto 1,630 618
Discount unZind on reclamation provision 94 376
Interest in respect of lease arrangements 710 192
2,895 1,295
13. INCOME TAX
Current tax:
Year Ended
31 December
2020
US$’000
Year Ended
31 December
2019
US$’000
UK corporation tax on the result for the year - -
Total current taxation - (292)
Deferred taxation 106 266
Income tax 106 (26)
Dierences explained beloZ:
Loss before tax (27,169) (13,087)
Loss before tax multiplied by the standard rate 19 (2019: 19) (5,162) (2,487)
Eect of:
Dierent tax rates (1,051) (519)
Non-qualifying depreciation 11
Expenses not deductible 2,391 244
Non-taxable portion of unrealised gains (7) 23
Tax losses for Zhich no deferred income tax asset Zas recognised 3,828 2,738
Yukon mining taxes 106 (26)
Tax charge / (credit) for the year 106 (26)
Unrecognised deferred tax asset
Tax losses UK – excess management expenses 2,165 2,145
Tax losses Canada 5,232 1,727
7,397 3,872
The deferred tax assets are currently unrecognised as the likelihood of suɝcient future taxable proȴts does not yet meet the deȴnition
of “probable”.
The unrecognised deferred tax asset has no expiry period.
The deferred tax liability of $388,000 (2019: $270,000) relates to timing dierences on long-term assets.
Notes to the Financial Statements
For the year ended 31 December 2020
48
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Pembridge Resources plc
|
Consolidated Financial Statements
14. EARNINGS PER SHARE
The calculation of basic and diluted loss per ordinary share is based on the folloZing data:
Year Ended
31 December
2020
Year Ended
31 December
2019
Basic and diluted loss per share (US cents) (20.8c) (33.5c)
Weighted average number of shares for basic and diluted loss per share 70,742,894 24,063,552
The basic and diluted loss per share have been calculated using the loss attributable to shareholders of the Company of US$14,731,000
(2019: US$8,063,000) as the numerator, i.e. no adjustment to loss Zas necessary. The basic and dilutive loss per share are the same as the
eect of the exercise of share options and Zarrants Zould be anti-dilutive.
Details of share options and Zarrants that could potentially dilute earnings per share in future periods are set out in Note 25.
15. PROPERTY PLANT AND EQUIPMENT - GROUP
Mineral
properties
US$’000
Plant,
equipment and
motor vehicles
US$’000
Construction
in progress
US$’000
Right of use
assets – plant
and equipment
US$’000
Total
US$’000
Cost
At 1 January 2020 20,281 23,829 2,435 7,178 53,723
Additions 4,070 236 213 6,561 11,080
Adjustment to reclamation provision 2,153 - - - 2,153
Reclassiȴed from mining claims 382 - - - 382
Disposals -----
FX on translation 789 523 63 506 1,881
At 31 December 2020 27,675 24,588 2,711 14,245 69,219
Depreciation
At 1 January 2020 (152) (2,080) - (1,284) (3,516)
Charge for the year (733) (3,150) - (4,498) (8,381)
FX on translation (42) (213) - (269) (524)
At 31 December 2020 (927) (5,443) - (6,051) (12,421)
Net book value at 31 December 2020 26,748 19.145 2,711 8,194 56,798
Net book value at 31 December 2019 20,129 21,749 2,435 5,894 50,207
Notes to the Financial Statements
For the year ended 31 December 2020
49
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Pembridge Resources plc
|
Consolidated Financial Statements
15. PROPERTY PLANT AND EQUIPMENT - GROUP (continued)
Mineral
properties
US$’000
Plant,
equipment and
motor vehicles
US$’000
Construction
in progress
US$’000
Right of use
assets – plant
and equipment
US$’000
Total
US$’000
Cost
At 1 January 2019 - 21 - - 21
Additions - - 403 7,065 7,468
Acquisition of subsidiary 20,370 22,986 1,954 - 45,310
Rehabilitation provision adjustment (813) - - - (813)
Disposals - (9) - - (9)
FX on translation 724 831 77 113 1,745
At 31 December 2019 20,281 23,829 2,434 7,178 53,722
Depreciation
At 1 January 2019 - (6) - - (6)
Charge for the year (149) (2,045) - (1,265) (3,459)
Depreciation Zritten back on disposals - 4 - - 4
FX on translation (3) (33) - (19) (55)
At 31 December 2019 (152) (2,080) - (1,284) (3,516)
Net book value at 31 December 2019 20,129 21,749 2,435 5,894 50,207
Net book value at 31 December 2018 - 15 - - 15
Notes to the Financial Statements
For the year ended 31 December 2020
50
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Pembridge Resources plc
|
Consolidated Financial Statements
15. PROPERTY PLANT AND EQUIPMENT - COMPANY
2020
Furniture and
oɝce equipment
US$’000
2019
Furniture and
oɝce equipment
US$’000
Cost
At 1 January 12 21
Additions --
Disposals -(9)
At 31 December 12 12
Depreciation
At 1 January (9) (6)
Charge for the year (3) (7)
Depreciation written back on disposals -4
At 31 December (12) (9)
Net book value at 31 December -3
16. INTANGIBLE ASSETS - GROUP
2020
Mining claims
US$’000
2019
Mining claims
US$’000
Cost
At 1 January 394 148
Additions - 237
Reclassiȴed to mineral properties (382) -
FX on translation (12) 9
At 31 December - 394
Depreciation
At 1 January --
Charge for the year --
FX on translation --
At 31 December --
Net book value at 31 December - 394
Notes to the Financial Statements
For the year ended 31 December 2020
51
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Pembridge Resources plc
|
Consolidated Financial Statements
17. INVENTORIES
Group
31 December
2020
US$’000
Group
31 December
2019
US$’000
Consumable parts and supplies 2,842 1,666
Ore stockpiles (to be processed within 12 months) 1,559 4,044
4,401 5,710
Inventories recognised as an expense during the year are shown in proȴt and loss as ȆProduction costs’ and amounted to $62,542,000
(2019: US$14,739,000). US$1,036,000 of inventories were written down during the year (2019: US$nil).
18. TRADE AND OTHER RECEIVABLES
Group
31 December
2020
US$’000
Group
31 December
2019
US$’000
Company
31 December
2020
US$’000
Company
31 December
2019
US$’000
Trade receivables 4,736 6,562 - -
Inter-company receivables - - 403 394
Other receivables - 10 - 10
Prepayments 615 298 23 14
VAT and other sales taxes 321 693 2 25
Unpaid share capital - 1,047 - 1,047
Other receivables 936 2,048 428 1,490
Trade and other receivables - current 5,672 8,610 428 1,490
Other receivables – non-current: Long-term deposits 7,059 4,040 - 1,517
Inter-company receivables - - 3,399 -
Long term deposits are held to provide security for decommissioning cost obligations. The inter-company receivable is payable by Minto
to Pembridge. Of this, $3,399,000 results from the transfer during 2020 of the surety account, containing at that date C$4 million, to Minto
from Pembridge, and is receivable in 2022.
19. CASH AND CASH EQUIVALENTS
Group
31 December
2020
US$’000
Group
31 December
2019
US$’000
Company
31 December
2020
US$’000
Company
31 December
2019
US$’000
Cash and short-term deposits 415 964 16 399
Notes to the Financial Statements
For the year ended 31 December 2020
52
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Pembridge Resources plc
|
Consolidated Financial Statements
20. TRADE AND OTHER PAYABLES
Group
31 December
2020
US$’000
Group
31 December
2019
US$’000
Company
31 December
2020
US$’000
Company
31 December
2019
US$’000
Trade payables 16,039 6,973 - -
Other payables and accruals 214 1,763 214 1,738
16,253 8,736 214 1,738
Trade and other payables are non-interest bearing and normally settled in the month following date of invoice.
21. LEASE LIABILITIES
2020
Lease liabilities
US$’000
2019
Lease liabilities
US$’000
At 1 January 5,633 -
Additions 6,562 6,974
Lease payments (5,521) (1,621)
Interest accretion 710 192
FX on translation 215 88
At 31 December 7,599 5,633
Current portion 4,764 2,899
Non-current portion 2,835 2,734
7,599 5,633
31 December 2020
US$’000
31 December 2019
US$’000
Undiscounted lease liabilities:
No later than 1 year 5,336 3,328
Later than 1 year and not later than 5 years 3,244 2,939
At 31 December 8,580 6,267
During the year, the Group entered into lease arrangements for several mining equipment assets. The incremental borrowing rate for the
lease liabilities initially recognised is 10 percent. Interest expense on the lease liabilities amounted to US$710,000 for the period ended
December 31, 2020 (2019 - $192,000). There were no leases with residual value guarantees or leases not yet commenced to which Minto
is committed. The expense relating to short-term leases and low value leases amounted to $nil for the period ended December 31, 2020
(2019 - $nil).
The right of use assets are shown in Note 15. The maturity analysis of lease liabilities is disclosed in Note 28.
Notes to the Financial Statements
For the year ended 31 December 2020
53
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Pembridge Resources plc
|
Consolidated Financial Statements
22. RECLAMATION AND CLOSURE COST PROVISION
2020
US$’000
2019
US$’000
At 1 January 22,438 22,084
Change in estimate 2,153 (813)
Interest expense from discounting obligations 94 376
FX on translation 601 791
At 31 December 25,286 22,438
A reclamation and closure cost obligation has been recognised in respect of the mining operations of the Minto Mine, including associated
infrastructure and buildings. The estimated undiscounted cash ȵows required to satisfy the Minto reclamation and closure cost obligation
as at December 31, 2020 were US$23.9 million (2019: US$20.8 million), which were adjusted for inȵation and uncertainty of the cash ȵows
and then discounted using current market-based pre-tax discount rate of 0.39 percent (2019: 1.68 percent). An amount of C$72.1 million
is secured by a Surety Bond from Zurich Insurance Company Ltd. in favour of the Government of Yukon. Capstone Mining Corp. acts as an
indemnitor to the surety bond provider.
The Company expects that the cash outȵows in respect to the balances accrued at the ȴnancial statement date will occur proximate to the
dates these long-term assets are retired.
In view of uncertainties concerning reclamation and closure cost obligations, the ultimate costs could be materially dierent from the
amounts estimated. The estimate of future reclamation and closure cost obligations is also subject to change based on amendments to
applicable laws and legislation. Future changes in reclamation and closure cost obligations, if any, could have a signiȴcant impact on the
asset retirement obligation.
Notes to the Financial Statements
For the year ended 31 December 2020
54
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Pembridge Resources plc
|
Consolidated Financial Statements
23. BORROWINGS
Group
31 December
2020
US$’000
Group
31 December
2019
US$’000
Company
31 December
2020
US$’000
Company
31 December
2019
US$’000
Loan notes 8,911 8,582 - -
Loans from directors 5,198 2,049 5,198 2,049
Prepayment funding 1,361 - - -
Borrowings – non-current 15,470 10,631 5,198 2,049
Prepayment funding - current 1,580 - - -
Other loans - current 20 - 20 -
Total borrowings 17,070 10,631 5,218 2,049
The Company and Minto entered into a Financing Agreement on 3 June 2019 with Copper Holdings, LLC, a New York based private equity
group and Cedro Holdings I, LLC, an entity managed by Lion Point Capital, L.P. (together, the ȆȆInvestor Consortium’’), pursuant to which the
Investor Consortium advanced $10 million to Minto to ȴnance the recommencement of operations. The $10 million comprised $1.6m of
subscription proceeds from new ȆB’ shares issued by Minto and $8.4m of proceeds, net of a 15.9 discount, from a private placement of
$10m of 8 loan notes. The Investor Consortium shall be entitled to be repaid from all free cash-ȵows and realisations arising from Minto
until the holders of the loan note (i.e., the Investment Consortium, their assignors and successors) have received US$10,000,000 plus
interest at a rate of 8 per annum. The Investor Consortium have been granted security over the assets of Minto until such time as the
holders of the loan note have been repaid.
On 8 September 2020, Minto entered into a Prepayment Facility Agreement with Sumitomo Canada Limited, the purchaser of its copper
under an otake agreement, under which Sumitomo has security over Minto’s assets. The facility limit is US$12.5 million and may be
drawn against at any time giving notice in increments of US$1 million. Interest is calculated quarterly on the outstanding balance at LIBOR
for the applicable period. The balance is repayable over the remaining life of the related otake agreement.
On 30 October 2019, the Company entered into a loan facility of e1.7 million with Gati Al-Jebouri, Chief Executive Oɝcer and Chairman of
the Board, which was increased to e3.7 million in February 2020 and reduced to e3.4m in January 2021. The loan is to be repaid by 31
December 2022 and carries interest at an annual rate of 10. The Company also pays an arrangement fee in the amount of 6 of the
amounts drawn down under the Loan. Of this facility, the full e3.4 million had been borrowed at 31 December 2020.
24. SHARE CAPITAL AND PREMIUM
Allotted, called up and fully paid
Number of
ordinary shares
Share Capital –
ordinary shares
US$000
Share premium
US$000
Total
US$000
At 1 January 2020 63,231,494 825 8,900 9,725
Proceeds from share issue at 0.033p per share 11,175,499 140 322 462
At 31 December 2020 74,406,993 965 9,222 10,187
Ordinary shares have attached to them full voting, dividend and capital distribution rights (including on a winding up).
On 16 April 2020 the Board of Directors approved the issuance and allotment of 11,175,499 new ordinary shares at a price of 3.3p each, raising
proceeds of e368,000. In order to enable this share issue within the rules of the London Stock Exchange the directors agreed to surrender their
share options and the following changes were made to the Convertible Loan Agreement with Pembridge’s Chairman and Chief Executive Oɝcer,
Gati Al-Jebouri:
• removing the right of Mr. Al-Jebouri to convert any of the loans to shares in the Company;
• the maturity date of the loans was extended from 25 October 2021 to 31 December 2022. The extension in maturity corresponds with the
Company’s expectations with regard to inȵow of funds from Minto Explorations Ltd to the Company; and
• in consideration for these changes, the Company agreed to increase the interest rate on the loan from 8 to 10 with eect from 1st May
2020, with the accumulated interest to be paid only at the maturity date of the loan with no interim payments.
To increase the share capital headroom and so enable the share issue, the Directors surrendered their rights to options over 4,085,000 shares.
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
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Consolidated Financial Statements
25. SHARE BASED PAYMENTS
Movements in the number of share options and warrants and their related weighted average exercise prices are as follows:
2020 2019
Options and warrants
Number
Average exercise price
(pence)
Options and warrants
Number
Average exercise price
(pence)
Outstanding at 1 January 7,859,800 19.09 177,110,843 3.29
Impact of share consolidation - (159,399,759)
Granted 7,206,666 5.69 6,284,800 12.65
Forfeited (7,159,000) 15.90 (16,136,084) 33.39
Outstanding at 31 December 7,907,466 9.77 7,859,800 19.09
Exercisable at 31 December 1,200,800 36.44 1,650,800 39.23
The weighted average remaining contractual life for the share options and warrants outstanding as at 31 December 2020 was 6.2 years
(2019: 8.6 years).
The fair value of share-based payment transactions is calculated using the Black-Scholes Option Pricing Model. Key inputs to the model
were: volatility 77.75, risk free rate 0.75 and dividend yield 0. Share options and warrants outstanding at the end of year have the
following expiry dates and exercise prices:
Grant-Vest Expiry date
Exercise price
(pence)
2020
Number
2019
Number
2017 2021 43.4 600,000 600,000
2018 2022 43.4 300,000 300,000
2018 2027 20.00 - 225,000
2018-2019 2027 40.00 - 225,000
2018-2020 2027 80.00 - 225,000
2019-2021 2029 12.50 - 5,984,000
2019 2022 15.625 300,800 300,800
2020-2021 2023 5.00 2,791,666 -
2020-2021 2030 5.00 3,915,000 -
Notes to the Financial Statements
For the year ended 31 December 2020
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Consolidated Financial Statements
26. BUSINESS COMBINATION AND ACQUISITION OF NON-CONTROLLING INTEREST
There were no acquisitions in 2020.
Acquisition of Minto Explorations Ltd
On 3 June 2019 the Company acquired all of the outstanding common shares of Minto Explorations Ltd (Minto) from Capstone Mining
Corp (Capstone) (“Minto Acquisition”).
The consideration for the Minto Acquisition, which is unconditional, comprises up to US$20 million in total payments due to Capstone
payable out of future cash ȵows and realisations from Minto and based on certain hurdles linked to production levels at Minto as well as
future copper prices as detailed below.
1. First payment to Capstone of US$5 million will be due at the earlier of when production at Minto has reached a steady state 60
of mill capacity and 21 January 2021 (the ȆRestart Date’).
2.
Second payment to Capstone of US$5 million will be due onc
e production at Minto has reached 60 of mill capacity and the
copper price has averaged over US$3.00/lb (US$6,615/t) for two consecutive quarters, within three years of the Restart Date.
3. Final payment to Capstone of US$10 million will be due upon the copper price achieving an average of US$3.50/lb (US$7,717/t)
for two consecutive quarters, within three years of the Restart Date.
The Company calculated a fair value for the total consideration due for the Minto Acquisition as US$9.2 million, and accordingly a liability
of $9.2 million was recorded in the consolidated statement of ȴnancial position. Because its payment is dependent on future events, this
liability is subject to revaluation on a mark-to-market basis, and has been so revalued as at 31 December 2020. This liability is held in the
books of the Company but the revised Shareholders’ Agreement between the Company and its fellow investors in Minto provides that
Minto may fund the deferred consideration payments due from Pembridge to Capstone and it is expected that this will happen.
On the same day, to fund the re-starting of mine operations, Pembridge made an agreement with two other investors, Copper Holdings
and Lion Point, who each acquired non-voting B shares in Minto which represent a one third economic interest each in Minto.
The provisional fair values of identiȴable assets and liabilities of Minto as at the date of acquisition were:
Provisional fair value
$’000
Cash and cash equivalents 1
Inventory 2,325
Long term deposits 2,371
Current assets 4,697
Mineral properties 20,370
Property, plant and equipment 22,986
Construction in progress 1,954
Non-current assets 45,310
Total assets 50,007
Income and mining tax (317)
Reclamation and closure cost provision (22,084)
Total liabilities (22,401)
Net Assets acquired at fair value 27,606
Non-controlling interest 18,404
Purchase consideration 9,202
27,606
Notes to the Financial Statements
For the year ended 31 December 2020
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Consolidated Financial Statements
26. BUSINESS COMBINATION AND ACQUISITION OF NON-CONTROLLING INTEREST (continued)
The Group elected to recognise the non-controlling interest at the proportionate share of the acquired identiȴable net assets. The
ȴnalisation of the valuation work required to determine the fair values of the assets and liabilities acquired was completed within 12
months of the acquisition date.
The Company’s one third economic interest in Minto means that it had an interest in 33 of the above net assets, which is US$9.2m. No
goodwill arose on the acquisition.
During 2020, the Company’s economic interest reduced to 11 under a revised Shareholders’ Agreement with the other Minto shareholders
under which the other shareholders contributed US$3 million of new equity to Minto and the Company was relieved of a funding obligation of
C$2 million, and it was agreed that Minto may fund the deferred consideration payments due from Pembridge to Capstone.
The revenue and loss before tax of Minto from acquisition to 31 December 2019, and for the full year of acquisition, are set out below.
From acquisition
US$’000
From 1 January 2019
US$’000
Revenue 12,398 24,556
Loss before income tax (7,562) (13,916)
There was no up front consideration for the acquisition. Transaction costs such as legal fees directly related to the acquisition were $198,000.
The non-current assets are not movable so were valued on an income basis as a part of the wider Minto business. This required a DCF
valuation of the overall business, based on the investment case, which gave a Business Enterprise Value (ȆBEV’). The values of the mineral
properties and property, plant and equipment from an independent valuation were reduced by an obsolescence provision in order that
the fair-valued nets assets would ȴt within the BEV.
Minto’s reclamation and closure cost provision reȵects its obligation to restore past disturbances caused by the mining, exploration and
development of the mine. It was valued with the income approach, reȵecting the present value of the expected reclamation cash ȵows,
based on an appropriate discount rate to reȵect the time value and risk of the cash ȵows.
27. NON-CONTROLLING INTEREST IN MINTO EXPLORATIONS LTD
In June 2020, the Company and its fellow investors agreed changes to the terms of the Shareholders’ Agreement. These changes resulted
in new investment into Minto by Copper Holdings and Cedro Holdings of US$ 3 million and relieved the Company of some large ȴnancial
obligations. They also resulted in a change in relative economic interests in Minto, increasing the combined economic ownership of
Copper Holdings and Cedro Holdings in Minto from 66.66 percent to 89 percent and reducing the economic ownership of Pembridge
from 33.33 percent to 11 percent. The Company considers that, although it now has an economic interest of considerably less than 50
in Minto’s results and net assets, it has control over Minto through holding 100 of voting rights and having control of the Minto Board,
which means that it is able to control the day-to-day operations of the mine. On this basis it continues to consolidate the results of Minto.
Year ended 31
December 2020
$’000
Year ended 31
December 2019
$’000
Balance at start of period 15,063 -
On acquisition of 67 economic interest of subsidiary - 18,404
Investment by non-controlling interest in Minto share capital 2,670 1,059
Change in share of economic interest in Minto 3,124 -
Share of loss for the period (12,544) (5,024)
Share of exchange dierence on translation (2) 624
Balance at end of period 8,311 15,063
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
|
Consolidated Financial Statements
27. NON-CONTROLLING INTEREST IN MINTO EXPLORATIONS LTD (continued)
Summarised ȴnancial information for Minto since its acquisition on 3 June 2019 is set out below.
Summarised income statement
Year to 31
December 2020
$’000
3 June – 31
December 2019
$’000
Revenue 58,278 12,398
Operating loss (13,341) (6,345)
Loss before income tax (15,976) (7,562)
Income tax (106) 26
Loss for the year (16,082) (7,536)
Summarised statement of ȴnancial position
Non-current assets 63,454 52,726
Current assets 7,048 13,789
Non-current liabilities (38,782) (34,024)
Current liabilities (22,382) (9,896)
Net assets 9,338 22,595
Cash ȵow statement
Cash ȵows from operating activities 9,455 (6,884)
Cash ȵows from investing activities (8,773) (559)
Cash ȵows from ȴnancing activities (890) 7,998
Net increase in cash and cash equivalents (208) 555
Cash and cash equivalents at start of period 565 1
Impact of exchange rates on cash balances 42 9
Cash and cash equivalents at end of period 399 565
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
|
Consolidated Financial Statements
28. FINANCIAL INSTRUMENTS
6LJQLȴFDQWDFFRXQWLQJSROLFLHV
Details of the signiȴcant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised, in respect of each class of ȴnancial asset, ȴnancial liability and equity instrument,
are disclosed in note 5.
The only ȴnancial assets currently held by the Group are classiȴed as receivables and cash and cash equivalents.
&DWHJRULHVRIȴQDQFLDOLQVWUXPHQWV
The carrying amounts presented in the statement of ȴnancial position relate to the following categories of assets and liabilities. The trade
payables are concentrate receivables as described in note 5. Because of the conditional nature of the deferred consideration due to
Capstone, this balance is shown at fair value and is subject to subsequent remeasurement with changes in fair value being booked to the
income statement.
Group
31 December
2020
US$’000
Group
31 December
2019
US$’000
Company
31 December
2020
US$’000
Company
31 December
2019
US$’000
Financial assets
$WIDLUYDOXHWKURXJKSURȴWDQGORVV
Trade receivables 4,736 6,562 - -
At amortised cost
Inter-company receivables - - 3,802 394
Other receivables 321 1,750 2 1,082
Long-term deposits 7,059 4,040 - 1,517
Cash and cash equivalents 415 964 16 399
12,531 13,316 3,820 3,392
Financial liabilities
At amortised cost
Trade payables (16,039) (6,973) - -
Other payables (214) (1,763) (214) (1,738)
Borrowings (17,070) (10,631) (5,218) (2,049)
$WIDLUYDOXHWKURXJKSURȴWDQGORVV
Deferred consideration due to Capstone (18,571) (9,202) (18,571) (9,202)
(51,894) (28,569) (24,003) (12,989)
As at 31 December 2020, trade and other receivables are all considered to be recoverable.
The fair value is equivalent to book value for current assets and liabilities at amortised cost. Trade receivables are classiȴed as level 2
under the fair value hierarchy. The key inputs to the valuation of the trade receivable balance are payable metal and future metal prices.
At each reporting date, trade receivables are marked-to-market based on a quoted forward price for which there exists an active market.
The main risks arising from the Company’s ȴnancial instruments are liquidity risk and foreign currency risk. Interest rate risk is minimised
by ȴxed rate borrowings as described in note 23. The Directors review and agree policies for managing these risks and these are
summarised below.
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
|
Consolidated Financial Statements
28. FINANCIAL INSTRUMENTS (continued)
/LTXLGLW\ULVN
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Company will encounter diɝculty in meeting its
ȴnancial obligations as they fall due. The Directors are current assessing the Company’s options in respect of raising additional ȴnance for
the business.
The Directors monitor cash ȵow on a regular basis and at quarterly Board meetings in the context of their expectations for the business, in
order to ensure suɝcient liquidity is available to meet foreseeable needs.
The Group’s cash at bank is held with institutions with A, AA and AA- credit ratings (Fitch).
As of December 31, 2020, the Group’s liabilities that have contractual maturities were as follows:
Contractual cash ȵows
Carrying amount
US$’000
Total
US$’000
2021
US$’000
2022
US$’000
2023
US$’000
2024
US$’000
After 2024
US$’000
Trade and other payables 16,253 16,253 16,253 - - - -
Long term debt 17,070 18,158 776 650 6,228 10,504 -
Lease liabilities 7,599 8,580 5,336 2,332 912 - -
Payable to Capstone 18,571 20,000 20,000 - - - -
59,493 62,991 42,365 2,982 7,140 10,504 -
The amount that will actually be paid to Capstone, and the timing thereof, is dependent on future copper price movements, so is not
certain, and there may be scope to negotiate a delay in payments beyond one year if this is necessary. Because the liability would become
payable in full only if copper prices remain at or above certain levels, the same factors that would cause it to be payable would also assist
the Group in funding it through increased operational cash ȵows.
As of December 31, 2019, the Group’s liabilities that have contractual maturities were as follows:
Contractual cash ȵows
Carrying amount
US$’000
Total
US$’000
2020
US$’000
2021
US$’000
2022
US$’000
2023
US$’000
After 2023
US$’000
Trade and other payables 15,709 15,709 15,709 - - - -
Long term debt 10,631 12,119 - 2,133 - - 9,986
Lease liabilities 5,634 6,268 3,329 2,525 414 - -
Payable to Capstone 9,202 5,000 5,000 - - - -
41,176 39,096 24,038 4,658 414 - 9,986
The cash ȵows for the payable to Capstone above were limited to the ȴrst payment due to the uncertainty over the other components of
the balance.
Notes to the Financial Statements
For the year ended 31 December 2020
61
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Pembridge Resources plc
|
Consolidated Financial Statements
28. FINANCIAL INSTRUMENTS (continued)
)RUHLJQFXUUHQF\ULVNPDQDJHPHQW
The carrying amounts of monetary assets and monetary liabilities denominated in a currency other than the relevant company’s functional
currency at the reporting date are as follows:
USD items in a CAD
functional company
31 December 2020
US$’000
GBP items in a USD
functional company
31 December 2020
US$’000
USD items in a CAD
functional company
31 December 2019
US$’000
GBP items in a USD
functional company
31 December 2019
US$’000
Financial assets
Trade receivables 4,736 - 6,562 -
Other receivables - 2 362 1,082
Cash and cash equivalents 257 16 754 399
Long term deposits 351 - - -
5,344 18 7,678 1,481
Financial liabilities
Trade and other payables (119) (214) (363) (1,738)
Long term debt (11,852) (5,198) (8,582) (2,049)
(11,971) (5,412) (8,945) (3,787)
(6,627) (5,394) (1,267) (2,306)
The following table details the Group’s sensitivity to a 10 increase and decrease in the US dollar against the relevant foreign currencies.
10 is the sensitivity rate used when reporting foreign currency risk internally and represents Management’s assessment of the
reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the year-end for a 10 change in foreign currency rates. A positive number below
indicates an increase in proȴt and equity where the US dollar strengthens 10 against the relevant currency. For a 10 weakening of the
US dollar against the relevant currency, there would be an equal and opposite impact on the proȴt and equity, and the balances below
would be negative.
31 December 2020
US$’000
31 December 2019
US$’000
Eect on loss 10 539 36
-10 539 36
Eect on equity 10 1,355 36
-10 1,355 36
Notes to the Financial Statements
For the year ended 31 December 2020
62
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Pembridge Resources plc
|
Consolidated Financial Statements
29. RECONCILIATION OF MOVEMENT IN NET DEBT
2020 At 1 January
US$’000
New
borrowing
US$’000
Interest
added to
debt
US$’000
Debt repaid
US$’000
Other cash
ȵows
US$’000
Foreign
exchange
US$’000
At 31
December
US$’000
Cash at bank and in hand 964 5,471 - (5,643) (419) 42 415
Borrowings -
by the Company (2,049) (2,471) (515) 50 - (233) (5,218)
by Minto (8,582) (3,000) (342) 72 - - (11,852)
(10,631) (5,471) (857) 122 - (233) (17,070)
Lease liabilities (5,633) (6,562) (710) 5,521 - (215) (7,599)
Net debt (15,300) (6,562) (1,567) - (419) (406) (24,254)
2019 At 1 January
US$’000
New
borrowing
US$’000
Interest
added to
debt
US$’000
Debt repaid
US$’000
Other cash
ȵows
US$’000
Foreign
exchange
US$’000
At 31
December
US$’000
Cash at bank and in hand 151 10,701 - (2,765) (7,132) 9 964
Borrowings -
by the Company (382) (2,265) (144) 707 - 35 (2,049)
by Minto - (8,436) (583) 437 - - (8,582)
(382) (10,701) (727) 1,144 - 35 (10,631)
Lease liabilities - (6,974) (192) 1,621 - (88) (5,633)
Net debt (231) (6,974) (919) - (7,132) (44) (15,300)
30. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Company considers its capital to be equal to the sum of its total equity, disclosed on the Group Balance Sheet, and net debt. The
Group’s objectives when managing its capital are:
• To ensure that the Group and all of its businesses are able to operate as going concerns and ensure that the Group operates within
the ȴnancial covenants contained within its debt facilities
• To have available the necessary ȴnancial resources to allow the Group to invest in areas that may deliver acceptable future returns
to investors
• To maintain suɝcient ȴnancial resources to mitigate against risks and unforeseen events
• To maximise shareholder value through maintaining an appropriate balance between the Group’s equity and net debt
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
|
Consolidated Financial Statements
31. GROUP STRUCTURE
The parent entity of the Group is Pembridge Resources plc , incorporated in England , and the book value of its subsidiaries are set out below.
2020
Company
$’000
2019
Company
$’000
At 1 January 9,202 -
Acquisition - 9,202
At 31 December 9,202 9,202
On 3 June 2019, the Company acquired 100 of the voting rights in Minto Exploration Ltd (ȆMinto’), which gives it control over the running
of its subsidiary. The other two investors in Minto have non-voting shares which do not give them control but do entitle them each to
a third of its economic interest. As part of the agreement with the other two investors they also each gained a third in the economic
interests of Yukon 536545 Inc. and Yukon 536445 Inc.
The details of its subsidiaries are as follows.
Ownership Interest
Activity Registered oɝce address Jurisdiction
As at
31 December 2020
As at
31 December 2019
Yukon 536545 Inc. Holds mining rights 200-204 Lambert Street,
Whitehorse, YT, Y1A 1Z4
Canada 11 33
Yukon 536445 Inc. Holds mining rights 200-204 Lambert Street,
Whitehorse, YT, Y1A 1Z4
Canada 11 33
Minto Exploration Ltd. Mining 625 Howe Street, Suite 860,
Vancouver, BC, V6C 3B8
Canada 11 33
Minotaur Acquisition Ltd. Dormant 625 Howe Street, Suite 860,
Vancouver, BC, V6C 3B8
Canada 100 100
The change in ownership interest during 2020 is explained in note 27.
Notes to the Financial Statements
For the year ended 31 December 2020
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Pembridge Resources plc
|
Consolidated Financial Statements
Notes to the Financial Statements
For the year ended 31 December 2020
32. COMMITMENTS AND CONTINGENCIES
Contingent consideration
On 3 June 2019, the Company acquired all of the outstanding common shares of Minto Explorations Ltd (“Minto”) from Capstone Mining
Corp (Capstone) (“Minto Acquisition”). The consideration for the Minto comprises up to US$20 million in total payments due to Capstone
payable out of future cash ȵows and realisations from Minto and based on certain hurdles linked to production levels at Minto as well as
future copper prices as detailed below. Of the three payments detailed below, the ȴrst is contingent only in respect of its timing, whereas
payments 2 and 3 are contingent on copper prices reaching certain levels within a speciȴed timeframe.
1. First payment to Capstone of US$5 million will be due at the earlier of when production at Minto has reached a steady state 60 of
mill capacity and 31 January 2021 (the ȆRestart Date’).
2. Second payment to Capstone of US$5 million will be due once production at Minto has reached 60 of mill capacity and the copper
price has averaged over US$3.00/lb (US$6,615/t) for two consecutive quarters, within three years of the Restart Date.
3. Final payment to Capstone of US$10 million will be due upon the copper price achieving an average of US$3.50/lb (US$7,717/t) for
two consecutive quarters, within three years of the Restart Date.
Because the payments are dependent on the above conditions being met, they are not certain in amount or timing. The Company has
calculated a fair value as at 31 December 2020 for the total consideration due for the Minto Acquisition as US$18.6 million (2019: US$9.2
million). This amount is divided between current and current liabilities as shown below, for both the Company and Group. The revised
Shareholders’ Agreement between the Company and its fellow investors in Minto provides that Minto may fund the deferred consideration
payments due from Pembridge to Capstone and it is expected that this will happen.
$’000 $’000
Current 18,571 4,897
Non-current - 4,305
18,571 9,202
Agreements with the Selkirk First Nation
Under the terms of a revised co-operation agreement between Minto and the Selkirk First Nation (“Selkirk”) dated 15 October 2009, Minto
has made various commitments to Selkirk to enhance Selkirk participation in the Minto Mine, including a variable net smelter return royalty
on production from the Minto Mine that ȵuctuates from 0.5 to 1.5 depending on the variation of copper prices, as well as various
commitments in respect of employment, contracting, training and scholarship opportunities.
33. EVENTS SUBSEQUENT TO THE REPORTING DATE
On 8 January 2021 the Board of Directors announced the issuance and allotment of 14,250,000 new ordinary shares at a price of 4.0p
each, raising proceeds of e570,000. Of these shares, 2,500,000 were issued in January and the remaining 12,000,000 are to be issued in
May 2021.
In accordance with the Share Purchase Agreement between Pembridge and Capstone, dated 3 June 2019, the purchase price for the
acquisition of Minto is deȴned as US$5 million payable by 31 March 2021 plus an additional up to US$15 million payable subject to copper
price levels as set out an RNS dated 4 June 2019. On 29 June 2020 the Amended and Restated Shareholders’ Agreement (“Agreement”)
between the Company and its fellow investors in Minto was signed. As per the Agreement, Minto shall pay the deferred consideration
payments to Capstone on behalf of Pembridge and the ȴrst payment of US$5 million noted above was made by Minto on 30 March 2021.
65
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Pembridge Resources plc
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Company Information
Company Information
Directors Gati Al-Jebouri
Francis Ralph McAllister
Guy Le Bel
(Chairman and Chief Executive Oɝcer)
(Non-Executive Director)
(Non-Executive Director)
Secretary David James
Registered oɝce 200 Strand
London WC2R 1DJ
Registered number 07352056 (England and Wales)
Auditor PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
Bankers Bank of Scotland
St James’s Gate
14-16 Cockspur Street
London SW1Y 5BL
Solicitors Armstrong Teasdale (UK) Limited
200 Strand
London WC2R 1DJ
Brokers Brandon Hill Capital Ltd
Kemp House
152-160 City Road
London EC1V 2NX
Registrars Link Group
10th Floor Central Square
29 Wellington Street
Leeds LS1 4DL
Website www.pembridgeresources.com
TDIM PERE
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Notice of Annual General Meeting
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT
AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK, SOLICITOR,
ACCOUNTANT, FUND MANAGER OR OTHER APPROPRIATE INDEPENDENT FINANCIAL ADVISER.
If you have sold or otherwise transferred all of your shares in Pembridge Resources plc (the “Company”), you should
send this document together with the accompanying documents as soon as possible to the purchaser or transferee
or to the stockbroker, bank or other agent through whom the sale or transfer was eected, for delivery to the
purchaser or transferee.
Pembridge Resources plc Annual General Meeting
24 June 2021
Notice of Annual General Meeting
Notice is given that the Annual General Meeting (“AGM”) of the
Company will be held at the oɝces of Armstrong Teasdale LLP
200 Strand London WC2R 1DJ on 24 June 2021 at 2:00 p.m. to
consider, and if thought ȴt, to pass the following resolutions.
In line with Governmental guidelines related to Covid-19,
the AGM will not be a public meeting and attendance by
shareholders will not be allowed. Shareholders are strongly
encouraged to vote online at
www.signalshares.com in
accordance with the instructions available on this website.
This letter provides you with some general background and
explanation of the resolutions to be put to the AGM.
PLEASE NOTE: IMPORTANT INFORMATION:
The health and well-being of our colleagues, shareholders
and the communities in which we operate is a priority
for us. However, we are also committed to ensuring
that shareholders can exercise their right to vote in the
upcoming AGM. In line with government guidelines,
the AGM will not be a public meeting and attendance by
shareholders will not be allowed but shareholders can be
represented by appointing the Chair of the meeting as
their proxy. Shareholders are strongly encouraged to vote
online at
www.signalshares.com in accordance with the
instructions available on this website. Shareholders are
encouraged to return this as early as possible in advance of
the AGM in accordance with the procedures set out on the
website in order to vote remotely at the AGM and in any
event no later than 2.00 p.m. on 22 June 2021.
Following the AGM, the results of the voting will be posted
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Stock Exchange.
The quorum for the AGM is any two shareholders or their
proxies / corporate representatives. We are therefore
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the attendance of two directors/employee shareholders.
In view of the restrictions on travel and public gatherings
in place at the date of writing, we do not intend to admit
any other shareholders to the meeting venue and any
shareholder who attempts to attend the AGM in person
will be excluded from the AGM by the Chair. Proceedings
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refreshments. In the event that, nearer the time,
relaxation of Covid-related guidelines means that the AGM
may be attended by shareholders, we will issue an RNS to
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www.pembridgeresources.com.
Notice of Annual General Meeting
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Resolutions 1 to 8 (inclusive) will be proposed as ordinary
resolutions and resolution 9 will be proposed as a special
resolution, and the authorities sought in resolutions 8 and 9
(inclusive) are designed to capture the authorities which the
Company would request in the ordinary course.
Ordinary resolutions
1.
To receive the Company’s au
dited ȴnancial statements for
the ȴnancial year ended 31 December 2020, together with
the Directors’ reports and the auditor’s reports set out in
the annual report for the year ended 31 December 2020
(the “2020 Annual Report”).
2. To approve the Directors’ remuneration report for the year
ended 31 December 2020, as set out on pages 16 to 18 of
the 2020 Annual Report.
3. To re-elect Gati Al-Jebouri as
a director of the Company.
4. To re-elect Guy Le Bel as a director of the Company.
5. To re-elect Frank McAllister as a director of the Company.
6. To re-appoint PKF Littlejohn LLP as auditor of the Company
to hold oɝce from the conclusion of this meeting until
the conclusion of the next AGM of the Company at which
accounts are laid.
7. To authorise the Directors to set the fees paid to the
auditor of the Company.
8. THAT the Directors be and they are hereby generally and
unconditionally authorised pursuant to section 551 of the
Companies Act 2006 (“the Act”) to exercise all powers of the
Company to allot shares in the capital of the Company up
to an aggregate nominal amount of £300,000 provided that
this authority shall, unless renewed, varied or revoked by
the Company in general meeting, expire at the conclusion
of the Company’s next Annual General Meeting after this
resolution is passed or, if earlier, at the close of business
15 months after the passing of this resolution, but, in each
case, so that the Company may make oers or agreements
before the authority expires which would or might require
shares to be allotted or Rights to be granted after the
authority expires, and so that the Directors may allot
shares or grant Rights in pursuance of any such oer or
agreement notwithstanding that the authority conferred by
this resolution has expired.
Special resolution
9. THAT (subject to passing of resolution 8 set out in the
notice of this meeting) the Directors be empowered to
allot ordinary shares (as deȴned in section 560 of the Act)
of the Company for cash, pursuant to the authority of
the directors under Section 551 of the Act conferred by
resolution 2 above (in accordance with Section 570(1) of
the Act), and/or by way of a sale of treasury shares for cash
(in accordance with Section 573 of the Act), in each case, as
if section 561 of the Act did not apply to any such allotment
or sale, provided that this power shall be limited to
allotments of ordinary shares up to an aggregate nominal
amount of £300,000; unless renewed, varied or revoked by
the Company in general meeting, such power shall expire
at the commencement of the next Annual General Meeting
of the Company, but so that the Company may before such
expiry make an oer or agreement which would or might
require ordinary shares to be allotted or treasury shares
to be sold after such expiry, and the Directors may allot
ordinary shares or sell treasury shares in pursuance of any
such oer or agreement as if the power conferred by this
resolution had not expired.
Recommendation
Your board of Directors (the “Board”) believe that each of the
resolutions to be proposed at the AGM is in the best interests of
the Company and its shareholders as a whole. Accordingly, the
Directors unanimously recommend that shareholders vote in
favour of all of the resolutions proposed, as the Directors intend
to do in respect of their own beneȴcial holdings.
BY ORDER OF THE BOARD
David James
Company Secretary
25 May 2021
Pembridge Resources plc
Registered Oɝce: 200 Strand London WC2R 1DJ
Registered in England No. 07352056
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Resolutions 1 to 4 (inclusive) will be proposed as ordinary
resolutions, which means that for each of those resolutions to
be passed, more than half the votes cast must be cast in favour
of the resolution. Resolution 5 will be proposed as a special
resolution, which means that for such resolution to be passed,
at least three-quarters of the votes cast must be cast in favour of
the resolution.
Resolution 1 – Receipt of 2020 Annual Report
The Directors are required to lay the Company’s audited ȴnancial
statements and the Directors’ and auditor’s reports before
shareholders each year at a general meeting of the Company.
The audited ȴnancial statements and the Directors’ and auditor’s
reports for the year ended 31 December 2020 are included in
the 2020 Annual Report.
Resolution 2 – Approval of Directors’ remuneration report
The Directors’ remuneration report (the “Directors’ Remuneration
Report”) is presented in two sections:
• the annual statement from the Chairman of the
Remuneration Committee; and
• the annual report on remuneration.
The annual statement from the Chairman of the Remuneration
Committee, set out in the 2020 Annual Report, summarises, for
the year ended 31 December 2020, the major decisions taken
on Directors’ remuneration, any substantial changes relating
to Directors’ remuneration made during the year, and the
context in which those changes occurred and decisions have
been taken. The annual report on remuneration, set out in the
2020 Annual Report, provides details of the remuneration paid
to Directors in respect of the year ended 31 December 2020,
including base salary, taxable beneȴts, short-term incentives
(including percentage deferred), long-term incentives vested
in the year, pension-related beneȴts, any other items in the
nature of remuneration and any sum(s) recovered or withheld
during the year in respect of amounts paid in earlier years. The
Directors’ Remuneration Report is subject to an annual advisory
shareholder vote by way of an ordinary resolution; resolution 2 is
to approve the Directors’ Remuneration Report.
Resolutions 3 to 5 – Individual re-election of Directors
In accordance with the UK Corporate Governance Code (the
“Code”) and the Articles, every Director will stand for re-election
at the AGM. Biographical details of each Director are set out
below. Over half of the Directors standing for re-election/election
are Non-executive Directors who are considered independent
under the Code.
Gati Al-Jebouri - Chairman
Mr Al-Jebouri, who was born in Bulgaria in 1969, graduated
from the University of Bristol with a Civil Engineering degree
in 1990 and from the Institute of Chartered Accountants as a
chartered accountant in 1994. In 2001 he was appointed Deputy
Minister of Energy of Bulgaria and in 2002 Bulgaria’s First Deputy
Minister of Finance. His varied career has included working
for the accountancy ȴrm KPMG in London and Bulgaria until
being recruited to LUKOIL, where he soon became Director of
investment and Finance in the London oɝce. In 2003 he became
Chief Financial Oɝcer of LITASCO (LUKOIL International Trading
and Supply Company), where he rose to Chief Executive Oɝcer
two years later. In 2010 he became Executive Director for Finance
and Marketing of LUKOIL Mid East Ltd and in 2016 was promoted
to Vice President LUKOIL and Head of Middle East Upstream.
He has been a Non-Executive Director since 2017 and became
Chairman and Chief Executive Oɝcer on 19 September 2019.
Frank McAllister – Non-Executive Director
With over 50 years’ industry experience, Frank McAllister has
held various senior and board positions in a number of metals
and mining companies. He worked with ASARCO LLC for 33
years during which he became Chief Financial Oɝcer in 1982
and then Executive Vice President of Copper Operations in 1993.
Eventually became ASARCO’s President and Chief Operating
Oɝcer before becoming Chairman and Chief Executive Oɝcer
in 1999. In 1996 he became an Independent Director of Clis
Natural Resources Inc and its Lead Director from 2004 to 2013.
From 2001 to 2013, Mr McAllister was chairman and chief
executive oɝcer of Stillwater Mining Company. Mr McAllister also
served as president of the National Mining Association between
2012 and 2013. Mr McAllister holds an MBA from New York
University, Bachelor of Science in Finance from the University
of Utah and attended the Advanced Management Program at
Harvard Business School.
Guy Le Bel - Non-Executive Director
Guy brings more than 30 years of international experience in
strategic and ȴnancial mine planning to the Pembridge team.
He is currently CEO of Aquila Resources Ltd. He was previously
CEO and CFO of Golden Queen Mining Ltd, and, earlier, was
Vice President Evaluations for Capstone Mining Corp, Director
of Golden Queen Mining, RedQuest Capital Corp and was VP,
Business Development at Quadra Mining Ltd. He also held
business advisory, strategy and planning, business valuation,
and ȴnancial planning management roles at BHP Billiton Base
Metals Ltd., Rio Algom Ltd. and Cambior Inc. He has extensive
experience across precious and base metals industries in the
Americas. Guy holds an MBA Finance from École des Hautes
Études Commerciales, a Master Applied Sciences, Mining
Engineering - University of British Columbia and a B.Sc. Mining
Engineering from Université Laval.
Explanatory notes to the proposed resolutions
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Resolution 6 – Re-appointment of auditor
The Company is required to appoint an auditor at each general
meeting at which accounts are laid before shareholders, to hold
oɝce until the next such meeting. The Audit Committee has
reviewed the eectiveness, performance, independence and
objectivity of the existing external auditor, PKF Littlejohn LLP, on
behalf of the Board, and concluded that the external auditor was
in all respects eective.
Resolution 7 – Authority to agree auditor’s remuneration
This resolution authorises the Directors, in accordance with
standard practice, to negotiate and agree the fees to be paid to
the auditor. In practice, the Audit Committee will consider and
approve the remuneration of the auditor on behalf of the Board.
Resolution 8 – Authority to allot shares
This resolution seeks shareholder approval to grant the Directors
the authority to allot shares in the Company, or to grant rights
to subscribe for or convert any securities into shares in the
Company (“Rights”) pursuant to section 551 of the Act (the
“Section 551 authority”).
The authority contained in the resolution will be limited to an
aggregate nominal amount of £300,000 and would give the
Directors authority to allot shares in the Company or grant Rights
in connection with a rights issue up to aggregate nominal amount
of £300,000.
The Company does not hold any shares in treasury.
If approved, the Section 551 authority shall, unless renewed,
revoked or varied by the Company, expire at the end of the
Company’s next AGM after the resolution is passed or, if earlier,
at the close of business 15 months after the passing of this
resolution. The exception to this is that the Directors may
allot shares or grant Rights after the authority has expired in
connection with an oer or agreement made or entered into
before the authority expired. The Directors have no present
intention to exercise the Section 551 authority.
Resolution 9 – Partial disapplication of pre-emption rights
This resolution seeks shareholder approval to grant the Directors
the power to allot equity securities of the Company pursuant to
section 570 and 573 of the Act (the “Section 570 and 573 power”)
without ȴrst oering them to existing shareholders in proportion
to their existing shareholdings.
The power in resolution 9 will be limited to allotments for cash up
to a maximum nominal value of £300,000.
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Explanatory notes as to the proxy, voting and attendance
procedures at the Annual General Meeting
The following notes explain your general rights as a shareholder
and your right to attend and vote at this AGM or to appoint
someone else to vote on your behalf. Members are entitled to
appoint a proxy/proxies to exercise all or any of the rights to vote
on their behalf at the meeting.
All shareholders are advised that, due to the Government’s
current restrictions and guidance, they will not be allowed
to attend the AGM in person but can be represented by the
Chair of the AGM as their proxy. An entitlement to attend
or speak, as referred to in this AGM Notice, will not allow
such persons to attend the AGM in person.
Given the restrictions on attendance, shareholders are
strongly encouraged to appoint the Chairman of the AGM
as their proxy, as any proxies (other than the Chairman of
the meeting) will not be permitted to attend the AGM in
person. Similarly, corporate representatives other than
the Chairman of the AGM will not be permitted to attend
the AGM in person:
A form of proxy for the AGM does not accompany this
Document. Instead, if you would like to vote on the
Resolutions you can:
(a) submit a proxy vote online at
www.signalshares.com.
You will need to log into your online account, or register
if you have not previously done so. To register you will
need your Investor Code, which is detailed on your share
FHUWLȴFDWHDQGLVDYDLODEOHIURPRXUUHJLVWUDUV/LQN*URXS
Once logged on, you can click on the ‘Vote Online Now’
button to vote;
(b) in the case of CREST members only, complete a CREST
Proxy Instruction as set out in the Notes to the Notice of
Annual General Meeting; or
(c) submit a hard copy form of proxy (appointing the
Chairman of the AGM as your proxy). You may request this
directly from our registrars, Link Group, by calling 0371
664 0300. Alternatively, you can request a hard copy proxy
card by emailing
shareholderenquiries@linkgroup.co.uk.
Hard copy proxy forms must be returned to the Company’s
registrars at Link Group, 10th Floor, Central Square,
29 Wellington Street, Leeds LS1 4DL.
1. To be entitled to attend and vote at the AGM (and for the
purpose of the determination by the Company of the votes
they may cast), shareholders must be registered in the
Register of Members of the Company at close of business
on 22 June 2021 (or, in the event of any adjournment, close
of business on the date which is 48 hours before the time
of the adjourned meeting). Changes to the Register of
Members after the relevant deadline shall be disregarded
in determining the rights of any person to attend and vote
at the meeting.
2. A member of the Company entitled to attend and vote
at the meeting convened by the notice set out above is
entitled to appoint one or more proxies to exercise all or
any of its rights to attend and to speak and vote in that
member’s behalf at the meeting. A proxy need not be a
member of the Company. More than one proxy may be
appointed to exercise the rights attaching to dierent
shares held by the member, but a member may not
appoint more than one proxy to exercise rights attached
to any one share. A form of proxy which may be used
to make such appointment and give proxy instructions
can be requested from Link Group on 0371 664 0300.
Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Link
Group is open between 09:00 - 17:30, Monday to Friday
excluding public holidays in England and Wales, and calls
may be recorded and randomly monitored for security
and training purposes. It should be noted however,
that due to the current COVID-19 pandemic, if
any person should appoint a proxy other than
the Chairman of the AGM, such proxy will not be
permitted to attend the AGM in person.
3. In the case of joint holders, where more than one of
the joint holders purport to appoint a proxy, only the
appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which
the names of the joint holders appear in the Company’s
register of members in respect of the joint holding (the ȴrst
name being the most senior).
4. A vote withheld is not a vote in law, which means that the
vote will not be counted in the calculation of votes for
or against the resolution. If no voting indication is given,
your proxy will vote to abstain from voting at his/her
discretion. Your proxy will vote (or abstain from voting) as
he/she thinks ȴt in relation to any other matter which is
put to the AGM.
5. To be valid, any instruction appointing a proxy must be
received at the Company’s Registrar by no later than 2.00
p.m. on 22 June 2021. If you return more than one proxy
appointment, either by paper or electronic communication,
that received last by the Registrar before the latest time for
the receipt of proxies will take precedence.
6. The submission of a form of proxy, other such instrument
or any CREST Proxy Instruction (as described in note 8
below) will not preclude a member from attending and
voting at the meeting in person should the situation and
the applicable restrictions regarding COVID-19 change
such that you are permitted to, and you subsequently
wish to do so.
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7. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for this meeting and any adjournment(s)
thereof by using the procedures described in the CREST
Manual (available via
www.euroclear.com). CREST personal
members or other CREST sponsored members, and those
CREST members who have appointed a voting service
provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate
action on their behalf.
8. In order for a proxy appointment made by means of
CREST to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated
in accordance with the speciȴcations of Euroclear UK
& Ireland Limited, and must contain the information
required for such instruction, as described in the CREST
Manual. The message, regardless of whether it constitutes
the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, to
be valid, be transmitted so as to be received by Link Group
(participating ID RA10 by the latest time for receipt of proxy
appointments speciȴed in this notice of meeting. For this
purpose, the time of receipt will be taken to be the time (as
determined by the timestamp applied to the message by
the CREST Application Host) from which the issuer’s agent
is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
9. CREST members and, where applicable, their CREST
sponsors, or voting service provider should note that
Euroclear UK & Ireland Limited does not make available
special procedures in CREST for any particular message.
Normal system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a
voting service provider, to procure that his CREST sponsor
or voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by
means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their
CREST sponsors or voting system provider are referred,
in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertiȴcated Securities Regulations 2001.
10. Any corporation which is a member can appoint one or
more corporate representatives who may exercise on its
behalf all of its powers as a member provided that no more
than one corporate representative exercises powers in
relation to the same shares. A resolution of the directors,
or other governing body, of the corporation will be
required in order to evidence the valid appointment of the
corporate representative, in accordance with section 323 of
the Act.
It should be noted however, that due to the current
COVID-19 pandemic, if any corporation should
appoint corporate representatives other than the
Chairman of the AGM, they will not be permitted to
attend the AGM in person.
11. Members may not use any electronic address (within
the meaning of section 333(4) of the Act) provided either
in this notice of meeting or any related documents to
communicate with the Company for any purposes other
than those expressly stated.
12.
Your personal data includes
all data provided by you, or
on your behalf, which relates to you as a shareholder,
including your name and contact details, the votes you
cast and your reference number (as attributed to you by
the Company or its registrars). The Company determines
the purposes for which, and the manner in which, your
personal data is to be processed. The Company and any
third party to which it discloses the data (including the
Company’s registrars) may process your personal data for
the purposes of compiling and updating the Company’s
records, fulȴlling its legal obligations and processing the
shareholder rights you exercise.
A copy of this Notice, and other information required by Section
311A of the Act, can be found on the Company’s website at
https://www.pembridgeresources.com/.
Shareholder enquiries
If you have any questions, please call the Company’s Registrars,
Link Group, on 0371 664 0300. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. We
are open between 09:00 - 17:30, Monday to Friday excluding
public holidays in England and Wales. Alternatively, you may send
an email to
enquiries@linkgroup.co.uk
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